<PAGE>   1
                                  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 SEPTEMBER 30, 1996

                                       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


                       GLOBAL VILLAGE COMMUNICATION, INC.


             (Exact name of registrant as specified in its charter)


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

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

                                 (408) 523-1000
              (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 September 30, 1996 was
16,857,708.
<PAGE>   2
                       GLOBAL VILLAGE COMMUNICATION, INC.

                                    FORM 10-Q

                FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1996

                                TABLE OF CONTENTS



<TABLE>
<CAPTION>
PART I.   FINANCIAL INFORMATION                                                  Page
<S>                                                                                <C>
  Item 1.  Consolidated Financial Statements

                 a)  Condensed Consolidated Balance Sheets
                     as of September 30, 1996 and March 31, 1996................    3

                 b)  Condensed Consolidated Statements of Operations
                     for the six months ended September 30, 1996 and 1995.......    4

                 c)  Condensed Consolidated Statements of Cash Flows
                     for the six months ended September 30, 1996 and 1995.......    5

                 d)  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....................................................   20

  Item 4.  Submission of Matters to a Vote of Security Holders..................   20

  Item 6.  Exhibits and Reports on Form 8-K.....................................   21

SIGNATURES......................................................................   22
</TABLE>




                                       2
<PAGE>   3
                          PART 1. Financial Information

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS



                       GLOBAL VILLAGE COMMUNICATION, INC.
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                 (In thousands)


<TABLE>
<CAPTION>
                                                        September 30,   March 31,
                                                            1996          1996
                                                            ----          ----
                                                         (unaudited)    (audited)
<S>                                                        <C>           <C>    
ASSETS
    Cash and short-term investments                        $11,326       $37,719
    Accounts receivable, net                                20,503        12,449
    Inventories, net                                         5,615         5,779
    Deferred income taxes                                   11,384         2,384
    Income tax receivable                                    2,505            --
    Other current assets                                     2,055         1,998
    Net assets of discontinued operations                       --           277
                                                           -------       -------
               Total current assets                         53,388        60,606

    Property and equipment, net                              8,811        10,055

    Investment in Ex Machina                                 4,043            --
    Other assets                                             1,343         1,374
                                                           -------       -------
       Total assets                                        $67,585       $72,035
                                                           =======       =======


LIABILITIES AND STOCKHOLDERS' EQUITY
    Current liabilities
       Accounts payable                                    $16,908       $18,046
       Accrued and other liabilities                         4,237         5,823
       Income taxes payable                                     --           335
       Net liabilities of discontinued operations            4,238            --
                                                           -------       -------
           Total current liabilities                        25,383        24,204

    Stockholders' equity                                    42,202        47,831
                                                           -------       -------
       Total liabilities and stockholders' equity          $67,585       $72,035
                                                           =======       =======
</TABLE>

See accompanying Notes to Condensed Consolidated Financial Statements.




                                       3
<PAGE>   4
                       GLOBAL VILLAGE COMMUNICATION, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                      (In thousands, except per share data)
                                   (unaudited)


<TABLE>
<CAPTION>
                                       Three Months Ended September 30,  Six Months Ended September 30,
                                             1996            1995            1996            1995
                                           --------        --------        --------        --------
<S>                                        <C>             <C>             <C>             <C>     
Net revenue                                $ 32,298        $ 30,636        $ 60,741        $ 58,247
Cost of revenue                              21,762          17,098          43,488          32,140
                                           --------        --------        --------        --------
    Gross profit                             10,536          13,538          17,253          26,107
                                           --------        --------        --------        --------
Operating expenses:
  Research and development                    3,082           3,329           6,443           6,359
  Marketing and sales                         6,048           5,019          13,581          10,069
  General and administrative                  1,995           1,192           3,366           2,538
  Loss from investment                           --              --           2,191              --
                                           --------        --------        --------        --------
    Total operating expenses                 11,125           9,540          25,581          18,966
                                           --------        --------        --------        --------

    Income (loss) from continuing
       operations                              (589)          3,998          (8,328)          7,141
Other income, net                               323             205             553             484
                                           --------        --------        --------        --------
    Income (loss) before income
       taxes                                   (266)          4,203          (7,775)          7,625
Provision for income taxes                      (93)          1,303          (2,796)          2,398
                                           --------        --------        --------        --------
    Net income (loss)
       from continuing operations          $   (173)       $  2,900        $ (4,979)       $  5,227
                                           --------        --------        --------        --------

Discontinued operations:
    Loss from discontinued
       operations                          $ (1,565)       $   (597)       $ (1,822)       $ (1,320)

    Gain on disposal of discontinued
       operations, net of taxes            $  2,133              --        $  2,133              --

                                           --------        --------        --------        --------
    Net income (loss)                      $    395        $  2,303        $ (4,668)       $  3,907
                                           ========        ========        ========        ========
    Net income (loss) per share
       from continuing operations          $  (0.01)       $   0.16        $  (0.30)       $   0.29
    Net income (loss) per share
       from discontinued operations        $   0.03        $  (0.03)       $   0.02        $  (0.07)
                                           --------        --------        --------        --------

    Net income (loss) per share            $   0.02        $   0.13        $  (0.28)       $   0.22
                                           ========        ========        ========        ========

    Shares used in computing
       net income (loss) per share           17,388          17,866          16,766          17,823
                                           ========        ========        ========        ========
</TABLE>

       See accompanying Notes to Condensed Consolidated Financial Statements.

                                       4
<PAGE>   5
                       GLOBAL VILLAGE COMMUNICATION, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                                     SIX MONTHS ENDED SEPTEMBER 30,
                                                                                        1996            1995  
                                                                                        ----            ----  
<S>                                                                                  <C>              <C>     
CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES:
         Net income (loss)                                                           ($  4,668)       $  3,907
         Adjustment to reconcile net income (loss)
         to net cash provided by operating activities:
                  Depreciation and amortization                                          1,675           1,211
                  Deferred income taxes                                                 (9,000)             --
                  Write-off Global Center Investment                                     2,191              --
         Changes in assets and liabilities:
                  Accounts receivable, net                                              (8,266)           (599)
                  Inventories                                                               83           1,510
                  Income taxes                                                          (2,840)          1,946
                  Other current assets                                                    (238)           (219)
                  Accounts payable                                                        (870)         (6,778)
                  Accrued and other liabilities                                         (1,079)            390
                                                                                      --------        --------
         Net cash provided by (used in) operating activities of:
                  Continuing operations                                                (23,012)          1,368
                  Discontinued operations                                                4,515           1,433
                                                                                      --------        --------
                           Net cash provided by (used in) operating activities         (18,497)          2,801
                                                                                      --------        --------
CASH FLOWS FROM INVESTING ACTIVITIES:
                  Purchases of property and equipment                                   (1,311)         (3,203)
                  Other assets                                                             (33)            131
                  Purchases of short-term investments                                  (23,217)         (7,618)
                  Proceeds from sales and maturities of short-term investments          44,542          16,018
                  Investment in Ex Machina                                              (4,043)             --
                  Investment in Global Center                                           (1,548)             --
                                                                                      --------        --------
                           Net cash provided by investing activities                    14,390           5,328
                                                                                      --------        --------

CASH FLOWS FROM FINANCING ACTIVITIES:
         Payments on repurchases of Common Stock                                        (1,161)             --
         Proceeds from issuance of Common Stock, net                                       447             767
                                                                                      --------        --------
                           Net cash  provided by (used in) financing activities           (714)            767
                                                                                      --------        --------
         Effect of exchange rate changes on cash and cash equivalents                     (247)            (90)
                                                                                      --------        --------

Net increase (decrease) in cash and cash equivalents                                    (5,068)          8,806
Cash and cash equivalents at beginning of period                                        15,900           5,789
                                                                                      --------        --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD                                            $ 10,832        $ 14,595
                                                                                      ========        ========

Supplemental disclosures:
         Cash paid during the period for:
                  Interest                                                            $      8              --
                  Income taxes                                                        $     44        $    383
         Non-cash investing and financing activities:
                  Non-cash net assets contributed to GlobalCenter, Inc.               $    643              --
</TABLE>

     See accompanying Notes to Condensed Consolidated Financial Statements.

                                       5
<PAGE>   6
                       GLOBAL VILLAGE COMMUNICATION, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION

The interim condensed consolidated financial statements as of September 30, 1996
and for the three and six months ended September 30, 1996 and 1995, include all
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. All periods presented have been restated to show the
discontinuance of the Company's enterprise network server operation based in the
U.K. (see Note 5). The Company's interim results are subject to fluctuation. As
a result, the Company believes the results of operations for the interim periods
are not necessarily indicative of the results to be expected for any future
period.

2. NET INCOME (LOSS) PER SHARE

Net income (loss) per share data has been computed using net income (loss) and
the weighted average number of shares of Common Stock and common equivalent
shares from stock options outstanding (when dilutive using the treasury stock
method).

3. INVENTORIES

<TABLE>
<CAPTION>
(in thousands)                  September 30, 1996               March 31, 1996
                                ------------------               --------------
<S>                                   <C>                            <C>   
Purchased parts                       $  270                         $  205
Work in process                          466                            198
Finished goods                         4,879                          5,376
                                      ------                         ------
                                      $5,615                         $5,779
                                      ======                         ======
</TABLE>

4. CASH AND SHORT-TERM INVESTMENTS

Under the provisions of Statement of Financial Accounting Standards ("SFAS") No.
115, "Accounting for Certain Investments in Debt and Equity Securities", the
Company has classified its investments in certain debt and equity securities as
available-for-sale. Such investments are recorded at fair value, with unrealized
gains and losses reported as a separate component of stockholders' equity. As of
September 30, 1996 unrealized gains and losses were not significant.

Short-term investments generally consist of U.S. Treasury Bills, commercial
paper, and municipal bonds with original maturities in excess of 90 days. At
September 30, 1996, all such investments had maturities or fixed put features of
less than one year. Available-for-sale securities consisted of the following (in
thousands):

<TABLE>
<CAPTION>
                                    September 30, 1996           March 31, 1996
<S>                                      <C>                        <C>    
U.S. Government securities               $   494                    $ 1,647
Municipal securities                          --                     20,172
                                         -------                    -------
                                         $   494                    $21,819
                                         =======                    =======
</TABLE>

These securities were classified as short-term investments as of September 30,
1996 and March 31, 1996.

                                       6
<PAGE>   7
5. 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
by December 31, 1996 (formerly, the Company's ISDN Division). The disposition of
the division has been accounted for as a discontinued operation in accordance
with APB No. 30 and prior period financial statements have been restated to
reflect the discontinuation of the enterprise network server operation. The
components of net assets (liabilities) of the discontinued operation included in
the consolidated balance sheets at September 30, 1996 and March 31, 1996 are
summarized as follows (in thousands):

<TABLE>
<CAPTION>
                                             September 30, 1996  March 31, 1996
<S>                                               <C>                <C>   
Current assets                                    $ 2,350            $3,181
Property and equipment, net                           100               738
                                                  -------            ------
     Total assets                                   2,450             3,919
                                                  -------            ------

     Total liabilities                              6,688             3,642

                                                  -------            ------
     Net assets (liabilities)                     $(4,238)           $  277
                                                  =======            ======
</TABLE>


The estimated exit costs of $6.9 million associated with discontinuance of this
operation consist primarily of asset and inventory liquidations, operating
losses during phaseout, customer returns and transition issues, personnel
severance, and other transaction costs. A summary of the exit costs are as
follows (in thousands):

<TABLE>
<S>                                                                     <C>    
Asset writeoffs                                                         $ 1,043
Inventory writedown                                                       1,889
Severance costs                                                             900
Operating losses during phase out                                         1,060
Customer returns and transition                                           1,839
Other fees and costs                                                        136
                                                                        -------
Total exit costs                                                        ($6,867)

Tax benefit                                                               9,000
                                                                        -------

Estimated gain on discontinuance                                        $ 2,133
                                                                        =======
</TABLE>




                                       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, 1996. 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

Global Village Communication, Inc. ("Global Village" or the "Company") was
founded in 1989 and is a leader in the design, development and marketing of
easy-to-use integrated communications products and services for users of
personal computers with Windows, Macintosh, OS/2 and DOS operating systems. The
Company's products enable mobile, home office and networked computer users in
small and medium-sized organizations to communicate efficiently with colleagues,
customers and suppliers.

The Company presently operates two major divisions: the Communications Systems
Division and the Communications Software Division. For the Apple Macintosh, the
Company's products are characterized by a highly integrated, proprietary
software and hardware design which makes computer communications easy for the
average user. For Windows, OS/2 and DOS operating systems, the Company provides
integrated communication software to original equipment manufacturers (OEMs)
such as Gateway and Dell Computers, and through other distribution channels to
end users. In addition, the Company recently announced the Company's NewsCatcher
wireless receiver which provides up-to-the minute news, sports and entertainment
information to users through the PC.

In April 1996, the Company incorporated its Internet Services Division as a
standalone business called GlobalCenter, Inc. At the same time, the Company
announced that UUNET Technologies, Inc., had acquired an equity interest in
GlobalCenter, Inc. The Company no longer has the ability to exercise significant
control over GlobalCenter, Inc. and accordingly no longer consolidates the
results of GlobalCenter, Inc. and accounts for its investment using the equity
method of accounting.

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 results for the division have been
accounted for as a discontinued operation in accordance with APB No. 30.

The Company in the past has experienced and in the future may experience,
significant fluctuations in annual and quarterly operating results that may be
caused by many factors including, among others, the introduction, enhancement or
recalls of products by Apple Computer, Inc. ("Apple"), IBM-compatible personal
computer (PC) manufacturers, the Company or its competitors; the sales rates of
Apple Macintosh personal computers and PCs; the size and timing of individual
orders; market price reductions; market acceptance of new products and
technology; seasonality of revenues; customer order deferrals and accelerations
in anticipation of new products; changes in the Company's operating expenses;
performance of the Company's distributors and suppliers; mix of products sold;
quality control of the Company's products; and general economic conditions. 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
indications of future performance.

                                       8
<PAGE>   9
The industry in which the Company competes generally is subject to short product
life cycles. In this regard, the Company traditionally has experienced a
significant reduction in the average selling prices of its products as the time
from product introduction elapses. In fiscal year 1996, the Company had
instituted significant price reductions with respect to substantially all of its
products and expects that competitive pressures will continue to necessitate
price reductions. In particular, the Company expects increased competition for
its products for the Apple Macintosh family of personal computers to continue as
competitors introduce modems for the Apple platform. There can be no assurance
that the trend of reduced average selling prices will not accelerate during
fiscal 1997.

In May 1996, Apple announced a repair program for its Powerbook 5300 and 190
laptop computers which was effectively a recall of defective Apple Macintosh
computers. As a result of the repair program, the Company experienced
significantly reduced sales of its PowerPort products, particularly, its
PowerPort PC cards. Sales of such products have not returned to the levels
achieved prior to Apple's announcement and the Company does not believe that it
will achieve such sales levels for the foreseeable future. The Company therefore
expects that revenues and/or gross margins from its products for the Apple
Macintosh family could decrease in future periods, which would have a material
adverse effect on the Company's business and results of operations unless the
Company can generate sufficient revenues and/or gross margins from its
Communications Software Division products and other products to compensate for
any shortfall in revenues from its Apple platform products. Any price reduction
or decrease in sales volume could have a material adverse effect on the
Company's results of operations.

Because the Company generally ships products within a short period after receipt
of an order, the Company typically does not have a material backlog of unfilled
orders, and revenues in any quarter are 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.

To date, a substantial majority of the Company's revenue has been attributable
to sales of its TelePort and PowerPort product lines (all of which are designed
around the Apple Macintosh family of computers), and the Company expects that
sales of these products will account for a majority of its revenue for the
foreseeable future. The Company's future financial performance will depend on
the successful development, introduction and customer acceptance of new and
enhanced versions of its TelePort, PowerPort, OneWorld and NewsCatcher products
as well as the Company's ability to generate increased sales of PC, or other
products. Though the Company continually seeks to further enhance its product
offerings and to develop new products, there can be no assurance that these
development efforts will result in enhanced or new products being introduced on
a timely basis, or that any such product enhancements or new products will
achieve market acceptance. In addition, the announcement by the Company of new
products with the potential to replace current products may cause customers to
defer purchasing the Company's current 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
writes off inventory that it considers to be excessive or obsolete, there can be
no assurance that the Company's recorded allowances for such write-offs and
returns will be adequate, and a material increase in such write-offs and returns
over historical rates would have a material adverse effect on the Company's
results of operations. There can be no assurance that 

                                       9
<PAGE>   10
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.

The Company is dependent on sole or limited source suppliers for certain key
components and services used in its products, particularly the modem chip sets
designed and manufactured by Rockwell International and the providing of timely
news and information services by the AirMedia Live! network. The Company has no
guaranteed supply arrangements with its sole or limited source suppliers. The
Company at times in the past has experienced delays in its ability to
manufacture 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 any sole or limited source supplier will meet the Company's
volume and scheduling requirements in the future or that the AirMedia Live!
network will provide updates in a timely manner. Any failure of any such
supplier to meet such requirements could have a material adverse effect on the
Company's business and results of operations.

The Company continually evaluates potential candidates for acquisitions. Such
candidates are selected based on products or markets which are complementary to
those of the Company. The Company's operations and financial results could be
significantly affected by such an acquisition. There can be no assurance that
any such contemplated acquisition will be consummated.

The following table sets forth, for the periods indicated, the percentage
relationship to net revenue of certain items in the Company's consolidated
statements of operations.

<TABLE>
<CAPTION>
                                           Three Months Ended      Six Months Ended
                                             September 30,          September 30,
                                            1996       1995       1996        1995
                                            ----       ----       ----        ----
<S>                                         <C>        <C>        <C>         <C>  
Net revenue                                 100 %      100 %      100 %       100 %
Cost of revenue                              67         56         72          55
                                            ---        ---        ---         ---
    Gross profit                             33         44         28          45
                                            ---        ---        ---         ---
Operating expenses:
    Research and development                 10         11         11          11
    Marketing and sales                      19         16         22          17
    General and administrative                6          4          6           5
    Loss from investment                     --         --          4          --
                                            ---        ---        ---         ---
       Total operating expenses              35         31         43          33
                                            ---        ---        ---         ---
       Income (loss) from continuing
           operations                        (2)        13        (15)         12
Other income, net                             1          1          1           1
                                            ---        ---        ---         ---
    Income (loss) before income taxes        (1)        14        (14)         13
Provision for income taxes                   --          4         (5)          4
                                            ---        ---        ---         ---
    Net income (loss)
       from continuing operations            (1)        10         (9)          9
                                            ---        ---        ---         ---
Discontinued operations
    Income (loss) from discontinued
       operations                            (5)        (2)        (3)         (2)
    Gain on disposal of discontinued
       operations, net of taxes               7         --          4          --
                                            ---        ---        ---         ---
    Net income (loss)                         1 %        8 %       (8)%         7 %
                                            ===        ===        ===         ===
</TABLE>

                                       10
<PAGE>   11
NET REVENUE

Net revenue includes revenue from gross shipments, licenses and royalties, less
reserves for returns and allowances. Net revenue increased 5.4% to $32.3 million
for the second quarter of fiscal 1997 from $30.6 million for the second quarter
of fiscal 1996. For the six months ended September 30, 1996, net revenue
increased 4.3% to $60.7 million compared to $58.2 million during the same period
ended September 30, 1995. The quarterly and six-month revenue comparisons
continued to be affected by Apple Computer's repair program for the Macintosh
PowerBook 5300 and 190 models. The impact of the repair program was that it
significantly reduced the number of Apple computers that would be available for
bundling with the Company's products. The Company's products most impacted by
Apple's repair program are its PowerPort PC cards.

International revenue decreased to $4.1 million or 13% of net revenues for the
second quarter of fiscal 1997 compared to $6.8 million or 22% for the second
quarter of fiscal 1996. For the six months ended September 30, 1996,
international net revenue totaled $7.9 million or 13% of total net revenue
compared to $14.5 million or 25% of total net revenue for the same period in the
prior year. The decrease in international net revenues is primarily attributable
to the decrease in the Company's sales to Apple in the Asia region. There can be
no assurance that the Company will be able to maintain or increase international
demand for the Company's 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.

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.

COST AND EXPENSES

Cost of revenue primarily consists 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 33% from
44% for the second quarters of fiscal 1997 and 1996, respectively. Gross profit
as a percentage of net revenue decreased to 28% from 45% for the six month
periods ended September 30, 1996 and 1995, respectively. The gross profit
decrease was attributable to both minimal revenue produced by higher margin
products, such as PowerPort PC cards, which were adversely impacted by Apple
Computer's repair program for the Macintosh PowerBook 5300 and 190 models, and
additional inventory reserves for slow moving products. 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 and
price reductions. In particular, the Company expects that over the next several
quarters, pricing pressures will continue, and new products will be introduced
by the Company's competitors, both of which may have an adverse effect on the
gross margins from the Company's products for the Apple platform. The Company

                                       11
<PAGE>   12
does not expect gross margins to return to its higher historical levels. In
order to maintain margins, the Company will be required to increase sales of its
PC products and to continue to introduce new price competitive products. There
can be no assurance that the Company will be able to do so.

Research and development expenses decreased 7% to $3.1 million or 10% of net
revenues for the second quarter of fiscal 1997 from $3.3 million or 11% of net
revenues in the comparable quarter of fiscal 1996. For the six months ended
September 30, 1996 research and development expenses remained flat at $6.4
million or 11% of net revenues compared to the same period of fiscal 1996.
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. The Company believes that
its future success will depend, in large part, on its ability to enhance its
existing product lines and to continue to develop, introduce and deliver new
products in a timely fashion. Accordingly, the Company expects that research and
development expenses will increase in absolute terms and could increase as a
percentage of total net revenue.

Marketing and sales expenses increased by 21% to $6.0 million or 19% of net
revenues in the second quarter of fiscal 1997 compared to $5.0 million or 16% of
net revenues during the same period of fiscal 1996. For the six months ended
September 30, 1996, marketing and sales expenses increased 35% to $13.6 million
or 22% of net revenues from $10.1 million or 17% of net revenues for the same
period in the prior year. Quarterly expenses increased primarily due to an
increase in advertising activities associated with the introduction of
NewsCatcher, the Company's first wireless internet receiver product, a 33.6 kbps
version of its Teleport fax/modems and a major upgrade to the Company's Focal
Point product. The Company intends to continue to expand its sales and marketing
organizations to promote further market acceptance of its Windows, OS/2, and DOS
communications software, as well as continuing sales and marketing expenditures
for the Apple product lines. Accordingly, marketing and sales expenses are
expected to increase in absolute terms and could increase as a percentage of
total net revenue. In addition, the Company expects that it will continue to
incur significant costs associated with the promotion of NewsCatcher, including
costs for advertising and channel development. If the NewsCatcher product is not
successfully promoted or the costs of such promotion exceed the Company's
anticipated costs, the Company's results of operations could be materially,
adversely effected.

General and administrative expenses increased 67% to $2.0 million or 6% of net
revenues in the second quarter of fiscal 1997 from $1.2 million or 4% of net
revenues in fiscal 1996. For the six months ended September 30, 1996, general
and administrative expenses increased 33% to $3.4 million or 6% of net revenues
from $2.5 million or 4% of net revenues for the same period in the prior year.
The increases in spending were largely due to legal expenses associated with the
settlement of two lawsuits and other general operating expenses due to increased
headcount.

In April 1996, the Company incorporated its Internet Services Division as a
standalone business called GlobalCenter, Inc. At the same time, the Company
announced that UUNET Technologies, Inc., had acquired an equity interest in
GlobalCenter, Inc. The Company no longer has the ability to exercise significant
control over GlobalCenter, Inc. and accordingly no longer consolidates the
results of GlobalCenter, Inc. and accounts for its investment using the equity
method of accounting. As a result of the refinancing and operating performance
of GlobalCenter, Inc. during the first quarter of fiscal 1997, the Company
recorded an investment loss of $2.2 million.

                                       12
<PAGE>   13
Net other income remained relatively flat at $0.3 million for the second fiscal
quarter of 1997 and $0.2 million for the second fiscal quarter of 1996. For the
six months ended September 30, 1996, net other income was $0.6 million compared
to $0.5 million for the same period in the prior year.

The Company's effective tax rates for the second quarter of fiscal 1997 and 1996
were 35% and 31%, respectively. For the six months ended September 30, 1996 the
effective tax rate was 36% compared to 31% for the same period in the prior
year. The increase in the tax benefit for the second quarter of fiscal 1997 and
the six months ending September 30, 1996 is due primarily to the reinstatement
of the Federal tax credit for increased research expenditures.

In the second quarter of fiscal 1997, the Company adopted a formal plan to
discontinue the enterprise network server operation based in the United Kingdom.
The disposition of the segment has been accounted for as a discontinued
operation. The discontinued enterprise network server operation reported a net
loss of $1.6 million from discontinued operations and an estimated net gain of
$2.1 million on the disposal of the operation. The net gain of $2.1 million on
the disposal of the discontinued operation consists of exit costs of $6.9
million offset by tax benefit of $9.0 million. See Note 5 of Notes to Condensed
Consolidated Financial Statements.

The Company recorded net income of $0.4 million, or $0.02 per share for the
second quarter of fiscal 1997 compared to net income of $2.3 million, or $0.13
per share for the comparable quarter of fiscal 1996. Net income of $0.4 million
includes a one-time net gain of $0.6 million associated with the discontinuance
of the enterprise network server operation based in the United Kingdom and a
one-time net charge of $0.3 million relating to the settlement of two lawsuits.
Excluding the one-time charges, net income for the second quarter of fiscal 1997
was $0.1 million or $0.01 per share. For the six months ended September 30,
1996, the Company recorded a net loss of $4.7 million or $0.28 per share
compared to net income of $3.9 million or $.22 per share for the same period in
fiscal 1996. The Company incurred a net loss in the six months ended September
30, 1996 due to the revenue and gross margin shortfall associated with Apple's
announced repair program, and the write-off of $2.2 million relating to the
refinancing of GlobalCenter, Inc.

LIQUIDITY AND CAPITAL RESOURCES

The Company's cash and short-term investments totaled $11.3 million at September
30, 1996, representing 16.8% of total assets. The six-month decrease in cash and
short-term investments of $26.4 million was primarily attributable to operating
losses (exclusive of deferred tax benefits), increased accounts receivable,
investments in Ex Machina, Inc. and GlobalCenter, Inc., and repurchases of
common stock.

At September 30, 1996, the Company had available lines of credit of
approximately $8.0 million under which the Company had no outstanding
borrowings. The Company renegotiated its lines of credit and as of October 22,
1996, increased its available line to $15.0 million. The terms of the renewal
are substantially similar to those of the previous agreement.

The Company does not expect fiscal 1997 capital expenditures to significantly
exceed historical levels.




                                       13
<PAGE>   14
Since its last fiscal year end, however, the Company has used approximately
$25.4 million in cash to finance both its continuing and discontinued operations
as well as various investing activities. At September 30, 1996, the Company's
principal sources of liquidity were $11.3 million in cash and short-term
investments and the available lines of credit discussed above. The Company has
undertaken measures to attempt to improve its cash operating performance and
manage its cash requirements for the remainder of fiscal 1997 and beyond through
the discontinuance of its enterprise network server operation, a planned
reduction in investment activities, and the implementation of cost containment
measures in certain operating areas.

The Company currently believes that existing cash and short-term investments and
available credit facilities, along with improved operating performance, the
discontinuance of the enterprise network server operation, the recovery of
certain tax assets, reduced investment requirements, and improved accounts
receivable collection efforts, will allow the Company to meet its cash
requirements for at least the next 12 months. There can be no assurance,
however, that the Company will not require additional financing during and after
such time period. 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 successfully reduce or control various operating expenses through
cost containment measures or operating reductions, the Company's investment
requirements, the success of the Company's marketing efforts, technological
advances and competition. There can be no assurance that adequate funding will
be available to the Company or, if available, that funding will be on terms
favorable to the Company, and could require the issuance of additional debt or
equity securities which could 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,
which could have a material adverse effect on the Company's business, financial
condition and results of operations.




                                       14
<PAGE>   15
RISK FACTORS

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 market for personal computer communications products is characterized by
continual change and improvement in hardware and software technology resulting
in short product life cycles. The Company's success will depend on its ability
to enhance its current products, 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, as well as new form factors such
as PCMCIA. 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. While the Company writes off inventory that it considers to
be excessive or obsolete, the Company has in the past recorded inventory
write-offs in excess of available reserves. There can be no assurance that the
Company's recorded allowances for such write-offs will be adequate in the
future, and material write-offs could have a material adverse effect on the
Company's results of operations. 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.

DEPENDENCE ON APPLE MACINTOSH FAMILY OF COMPUTERS; ADVERSE EFFECT OF REDUCED
APPLE SALES

A substantial majority of the Company's sales to date have been derived from
products designed for use with the Apple Macintosh family of personal computers,
including the Macintosh desktop series of computers and the PowerBook series of
portable computers. Therefore, the Company is substantially dependent of the
sale of Apple Macintosh computers and the development and sale of new Apple
computers. Due to expected continuing pricing pressures and new product
introductions by the Company's competitors, the Company expects that revenues
from its products for the Apple Macintosh family could decrease in future
periods, which would have a material adverse effect on the Company's business
and results of operations unless the Company can generate sufficient revenues
from its PC and other products to compensate for any shortfall in revenues from
its Apple products. The market for personal computers is extremely competitive
and rapidly changing. There can be no assurance that personal computers
competing with the Apple Macintosh family of computers will not displace the
Macintosh products or reduce their growth as such personal computers are
enhanced in their functionality, evolve to support technologically superior
applications or otherwise become economically more attractive.

Apple in the past has experienced difficulty in making the transition associated
with the development, manufacturing, marketing, and sale of certain new
computers. In this regard, the Company anticipates that




                                       15
<PAGE>   16
there will be ongoing transitions within the Apple product line. These
transitions will subject the Company to the risks that (i) potential customers
will defer purchases of current products as a result of, among other things,
speculation or premature announcements about new products, discontinuance of
product lines or corporate restructuring; (ii) the products will not be
successfully received in the marketplace; and (iii) Apple will be unable to
adequately meet demand for the new products. The inability of Apple to
successfully develop, manufacture, market, sell or make the transition to new
products, including, among others, new PowerBook products and PowerPC-based
computers, would have a material adverse effect on the Company's results of
operations. In addition, sales of the Company's products in the past have been
adversely affected by the announcement by Apple of new products with the
potential to replace existing products.

DEPENDENCE ON RELATIONSHIP WITH APPLE

The Company relies on its working relationship with Apple, which includes
collaborative product development, sharing of information, product sales to
Apple and licensing of Apple technology. Apple is not contractually obligated to
continue such collaborative development or information sharing activities and
could discontinue such activities at any time. In addition, Apple is not
contractually obligated to renew its licenses with the Company or purchase the
Company's products. Apple is collaborating with other vendors of communications
products that compete with the Company's products, and Apple may elect not to
renew its licenses with the Company in the future. The Company's strategy of
developing products compatible with the Macintosh family of products is
substantially dependent on the Company's ability to gain pre-release access to,
and to develop expertise in, current and future Macintosh product developments
by Apple. There can be no assurance that Apple will continue to cooperate with
the Company, and the inability of the Company to maintain and further develop
its relationship with Apple would have a material adverse effect on the
Company's results of operations. There can be no assurance that Apple will not
initiate product repair/recall programs in the future for its Macintosh
computers, which if it did, would have an adverse impact on the revenues of the
Company.

WIRELESS TECHNOLOGY

In June 1996, the Company announced that it was entering into a licensing
agreement with Ex Machina, Inc. pursuant to which the Company intends to
develop, market and distribute receivers for Ex Machina's AirMedia Live!
network. In July 1996, the Company completed an equity investment of
approximately $4 million. The Company has no experience in developing products
based on wireless technology and there can be no assurance that it will be able
to successfully develop, market or distribute such devices. Ex Machina, Inc. is
a venture capital-backed start-up that does not have significant experience in
operating networks similar to the AirMedia Live! network. There can be no
assurance that Ex Machina will successfully manage the AirMedia Live! network or
that it will be able to provide timely and reliable service. Furthermore, the
AirMedia Live! network is supported by a single wireless paging company. If such
company experiences system outages or the AirMedia Live! network proves to be
unreliable or does not provide updates in a timely manner, revenue from
NewsCatcher will be materially, adversely effected which could have a material
adverse effect on the Company's results of operations.




                                       16
<PAGE>   17
COMPETITION

The market for the Company's products is intensely competitive and characterized
by rapidly changing technology, evolving industry communication standards and
frequent new product introductions. A number of competitors offer products that
compete with one or more of the Company's products. Other companies in the
personal computer industry, such as modem vendors, remote access server vendors,
communications software vendors, microprocessor and chip set suppliers,
networking equipment suppliers, fax machine manufacturers, personal computer
manufacturers, paging companies and telecommunications companies could seek to
expand their product offerings by designing and selling products using
competitive technology that could render the Company's products obsolete or have
a material adverse effect on sales of the Company's products.

Apple currently offers products that compete directly or indirectly with the
Company's products and can be expected to introduce additional competitive
products in the future. Apple currently bundles modems and communications
software with some of its computers, and the Company anticipates that Apple will
continue to bundle such products in the future. In addition, Apple may further
enhance communications functionality within its desktop or portable computers.
Any such additional bundling or enhancement by Apple could have a material
adverse effect on the Company's results of operations.

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 products is characterized by significant price
competition, and the Company expects that it will face increasing pricing
pressures from its current 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 further reduce its prices. Any material reduction in the
prices of the Company's products would negatively affect gross profit as a
percentage of net revenue and would require the Company to increase unit sales
in order to maintain net revenue.

DEPENDENCE ON MANUFACTURERS

The Company's manufacturing operations consist primarily of turnkey managers,
program managers, quality assurance, packaging and shipping personnel. For a
majority of its hardware assemblies, the Company purchases fully manufactured
and tested units from Flextronics Technologies, Inc., a "turnkey" manufacturing
subcontractor. Components and manufacturing services from the Company's
suppliers are obtained on an as-needed basis. 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 primary "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.




                                       17
<PAGE>   18
RELIANCE ON DISTRIBUTORS

A majority of the Company's net revenue is derived from sales to distributors
that are not under the direct control of the Company. These distributors carry
multiple product lines and could reduce their support of the Company's products
in favor of a competitor's products or for any other reason. The loss of any of
the Company's major distributors would have a material adverse effect on the
Company's results of operations. Under certain conditions, the Company offers
stock balancing and price protection programs to its distributors. Therefore,
the Company is exposed to the risk of product returns from distributors and
direct reseller customers. There can be no assurance that the Company's recorded
allowances for returns will be adequate and a material increase in returns over
historical rates would have a material adverse effect on the Company's results
of operations.

DEPENDENCE ON KEY PERSONNEL; INTEGRATION OF NEW MANAGEMENT

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. For
example, in November 1996, the Vice President of Sales announced his resignation
from the Company. As a result, the Company will be required to replace such
individual in a timely manner. 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. The Company has no employment
agreements with any of its key employees.

The Company has experienced growth in the number of employees. This growth has
placed substantial demands on the Company. The Company's ability to assimilate
new personnel will be critical to the Company's performance. The Company will be
required to recruit additional key management personnel, expand its direct sales
force, expand its customer support functions and train, motivate and manage its
employees. There can be no assurance that the Company will be able to manage
these changes successfully.

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 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 assurances 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.

                                       18
<PAGE>   19
The Company is aware of products in addition to its own that are marketed under
the trademarks "PowerPort," "TelePort," "GlobalFax", "Focal Point" and
"OneWorld". The Company also is aware of a company that operates under the name
Global Villages and provides computer-related services. There can be no
assurance that litigation with respect to these trademarks will not be
instituted by any such parties or by others as has occurred with FocalPoint (see
Item 1. Legal Proceedings). 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.

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, Apple, PC
manufacturers, 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.




                                       19
<PAGE>   20
                           PART II. OTHER INFORMATION


ITEM 1. LEGAL PROCEEDINGS


On March 24, 1995, a complaint was filed in the Santa Clara County Superior
Court against the Company and certain individuals after plaintiff's employment
with the Company ended, reference is made to Item 3. Legal Proceedings, of the
Company's Annual Report on Form 10-K for the fiscal year ended March 31, 1996.
In July 1995, both the Company and certain individuals filed their answers to
the complaint, generally denying the allegations against them and raising
numerous affirmative defenses. In August 1996, the parties agreed to settle the
suit, the terms of which are confidential.

On April 8, 1996, in response to trademark infringement claims asserted by
Apollo Travel Services Partnership ("Apollo") and Galileo International
Partnership ("Galileo") with respect to Global Village's trademark FocalPoint,
Global Village filed an action in the Northern District of California seeking a
judicial declaration of non-infringement. Apollo and Galileo subsequently filed
a trademark infringement action in the Northern District of Illinois alleging
infringement of their rights in the mark FOCALPOINT. On October 18, 1996, all
claims between the parties regarding the FocalPoint mark were settled with the
Company agreeing to add a space between the name Focal and Point.

Litigation is inherently uncertain, and there can be no assurance that any
future litigation will not have a material adverse effect on the Company.


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

Global Village Communication, Inc. held an annual meeting of Shareholders on
July 31, 1996. The following matters were approved by the shareholders by the
votes indicated:

<TABLE>
<CAPTION>
       MATTER                                     NUMBER OF SHARES      
       ------                                     ----------------      
                                                FOR             WITHHELD
                                                ---             --------
<S>                                          <C>                <C>    
         ELECTION OF DIRECTORS:

         Neil Selvin                         13,873,161         137,742
         Leonard A. Lehmann                  13,876,061         134,842
         Kevin R. Compton                    13,873,561         137,342
         Eugene Eidenberg                    13,867,889         143,014
         Kenneth A. Goldman                  13,865,489         145,414
</TABLE>




                                       20
<PAGE>   21
<TABLE>
<CAPTION>

OTHER MATTERS:                                                                  For          Against       Abstain   Broker Non-Vote
                                                                                ---          -------       -------   ---------------
<S>                                                                          <C>            <C>            <C>           <C>    
To approve the amendment to the 1991 Stock Option Plan to increase the
number of shares of Common Stock authorized for issuance by 700,000
shares.                                                                      12,087,770     1,343,357      36,631        543,145
                                                                                                                         
To approve the amendment to the 1994 Non-Employee Directors' Stock                                                       
Option Plan to increase the number of shares of Common Stock                                                             
authorized for issuance thereunder by 100,000 shares.                        12,966,899       717,742      39,537        286,725
                                                                                                                         
To approve the amendment to the 1994 Non-Employee Directors' Stock                                                       
Option Plan to increase the one-time grant to non-employee directors                                                     
upon first becoming directors of the Company from 10,000 to 25,000                                                       
shares, and to increase the number of shares automatically granted                                                       
each year to non-employee directors from 2,000 to 6,000 shares.              12,911,721       770,400      42,057        286,725
                                                                                                                         
To ratify the appointment of KPMG Peat Marwick LLP as the Company's                                                      
independent auditors.                                                        13,949,936        37,495      23,472             --
</TABLE>



ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

     (a)  Exhibits

          11.1 Computation of Net Income (Loss) Per Share

     (b)  Report on Form 8-K

          There were no reports on Form 8-K filed during the period.

ITEMS 2, 3 AND 5 ARE NOT APPLICABLE AND HAVE BEEN OMITTED.




                                       21
<PAGE>   22
                                   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.

                                   Global Village Communication, Inc.

November 12, 1996                    /S/James M. Walker
-----------------                    -------------------------------------------
   Date                                 James M. Walker
                                        Vice President, Finance and
                                        Chief Financial Officer
                                        (Principal Financial and
                                        Accounting Officer)




                                       22
<PAGE>   23
                                 Exhibit Index


Exhibit 11.1   Computation of Net Income (Loss) Per Share

Exhibit 27     Financial Data Schedule