<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 SEPTEMBER 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 October 30, 1998 was
17,427,043


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<PAGE>   2

                             ONEWORLD SYSTEMS, INC.

                                    FORM 10-Q

                FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1998

                                TABLE OF CONTENTS

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

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

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

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

                Condensed Consolidated Statements of Cash Flows
                  for the six months ended September 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...........................................................9


PART II. OTHER INFORMATION

        Item 1. Legal Proceedings..................................................................17

        Item 2. Changes in Securities/Recent Sales of Unregistered Securities......................17

        Item 3. Defaults Upon Senior Securities....................................................17

        Item 4. Submission of Matters to a Vote of Security Holders................................17

        Item 5. Other Information..................................................................17

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


SIGNATURES.........................................................................................19
</TABLE>

<PAGE>   3

                          PART I. FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                             ONEWORLD SYSTEMS, INC.
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                 (In thousands)
                                   (unaudited)

<TABLE>
<CAPTION>
                                                       September 30,   March 31,
                                                          1998           1998
                                                       -------------   ---------
<S>                                                    <C>             <C>    
ASSETS
Current assets:
    Cash and cash equivalents                            $ 1,526        $ 3,097
    Note receivable from Boca Research, Inc.               5,855             --
    Accounts receivable, net                                 182          8,160
    Inventories, net                                          18          2,351
    Other current assets                                     245            253
                                                         -------        -------
       Total current assets                                7,826         13,861

Property and equipment, net                                  431          4,049
Other assets                                                  64             63
                                                         -------        -------
       Total assets                                      $ 8,321        $17,973
                                                         =======        =======



LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
    Accounts payable                                     $   809        $ 7,625
    Accrued and other liabilities                          3,244          6,003
                                                         -------        -------
       Total current liabilities                           4,053         13,628

Stockholders' equity                                       4,268          4,345
                                                         -------        -------
       Total liabilities and stockholders' equity        $ 8,321        $17,973
                                                         =======        =======
</TABLE>



      See accompanying Notes to Condensed 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                Six months ended
                                                                September 30,                    September 30,
                                                         -------------------------         -------------------------
                                                           1998             1997             1998             1997
                                                         --------         --------         --------         --------
<S>                                                      <C>              <C>              <C>              <C>     
Net revenue                                              $    353         $ 17,100         $ 12,718         $ 33,007
Cost of revenue                                               129           12,038            9,678           22,354
                                                         --------         --------         --------         --------
    Gross profit                                              224            5,062            3,040           10,653
                                                         --------         --------         --------         --------

Operating expenses:
    Research and development                                1,082            2,722            3,619            5,144
    Sales, general and administrative                       1,692            4,253            5,584            9,454
    Restructuring costs                                        --               --              404               --
                                                         --------         --------         --------         --------
       Total operating expenses                             2,774            6,975            9,607           14,598
                                                         --------         --------         --------         --------
       Loss from operations                                (2,550)          (1,913)          (6,567)          (3,945)
                                                         --------         --------         --------         --------

Other income, net:
    Gain on sale of modem operations                           --               --            6,128               --
    Gain on sale of investments                                --            1,617               --            1,617
    Other income, net                                          93              244              105              301
                                                         --------         --------         --------         --------
       Total other income, net                                 93            1,861            6,233            1,918
                                                         --------         --------         --------         --------
    Loss before income taxes                               (2,457)             (52)            (334)          (2,027)
    Income tax benefit                                         --               --               22               --
                                                         --------         --------         --------         --------
       Loss from continuing operations                     (2,457)             (52)            (312)          (2,027)
                                                         --------         --------         --------         --------

Discontinued operations:
    Income from discontinued operations                        --               --               90               --
                                                         --------         --------         --------         --------
       Net loss                                          $ (2,457)        $    (52)        $   (222)        $ (2,027)
                                                         ========         ========         ========         ========


Basic per share data:
    Loss per share from continuing operations            $  (0.14)        $  (0.00)        $  (0.02)        $  (0.12)
    Income per share from discontinued operations              --               --             0.01               --
                                                         --------         --------         --------         --------
       Net loss per share                                $  (0.14)        $  (0.00)        $  (0.01)        $  (0.12)
                                                         ========         ========         ========         ========

Diluted per share data:
    Loss per share from continuing operations            $  (0.14)        $  (0.00)        $  (0.02)        $  (0.12)
    Income per share from discontinued operations              --               --             0.01               --
                                                         --------         --------         --------         --------
       Net loss per share                                $  (0.14)        $  (0.00)        $  (0.01)        $  (0.12)
                                                         ========         ========         ========         ========

Shares used in computing per share amounts:
    Basic                                                  17,179           16,979           17,171           16,935
    Diluted                                                17,179           16,979           17,171           16,935
</TABLE>



      See accompanying Notes to Condensed Consolidated Financial Statements



                                       4
<PAGE>   5

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

<TABLE>
<CAPTION>
                                                                        Six months ended
                                                                          September 30,
                                                                      1998            1997
                                                                     -------         -------
<S>                                                                  <C>             <C>     
OPERATING ACTIVITIES:
    Net loss                                                         $  (222)        $(2,027)
    Adjustments to reconcile net loss to net cash
      used in operating activities:
       Depreciation and amortization                                     671           1,775
       Gain on sale of modem operations                               (6,128)             --
       Loss on sale of investments                                        --           2,074
       Changes in operating assets and liabilities:
          Accounts receivable, net                                    (1,070)         (8,746)
          Receivable from sale of investment                              --          (3,691)
          Inventories                                                    200            (214)
          Income taxes                                                    --           7,665
          Other current assets                                           (54)           (144)
          Accounts payable                                               758            (923)
          Accrued and other liabilities                                  480            (105)
                                                                     -------         -------
    Net cash used in operating activities of:
       Continuing operations                                          (5,365)         (4,336)
       Discontinued operations                                          (184)             --
                                                                     -------         -------
          Net cash used in operating activities                       (5,549)         (4,336)
                                                                     -------         -------

INVESTING ACTIVITIES:
    Proceeds from sale of modem operations                             4,000              --
    Proceeds from sale of investments                                     --           1,969
    Purchases of property and equipment                                  (30)           (220)
    Other assets                                                          (2)             56
                                                                     -------         -------
           Net cash provided by investing activities                   3,968           1,805
                                                                     -------         -------

FINANCING ACTIVITIES:
    Repayments under line of credit                                       --          (4,241)
    Proceeds from issuance of Common Stock, net                            9             107
                                                                     -------         -------
          Net cash provided by (used in) financing activities              9          (4,134)
                                                                     -------         -------

Net decrease in cash and cash equivalents                             (1,572)         (6,665)
Cash and cash equivalents at beginning of period                       3,098           9,687
                                                                     -------         -------
Cash and cash equivalents at end of period                           $ 1,526         $ 3,022
                                                                     =======         =======

SUPPLEMENTAL DISCLOSURES:
    Cash paid:
       Interest                                                      $   198         $   133
       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 Condensed 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") provides
     simple, easy-to-use wide-area communication solutions to help businesses
     communicate efficiently and cost effectively. The Company designs,
     develops, manufactures and sells integrated client and server hardware and
     software solutions for the growing communication needs of small and
     medium-sized businesses and offices. The Company's recently released
     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. Founded in 1989 as Global Village Communication, Inc.,
     OneWorld Systems is the only supplier of communication solutions that
     integrate fax services, Internet and remote access for Windows and mixed
     Windows/Mac personal computer environments.

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     BASIS OF PRESENTATION. The interim condensed consolidated financial
     statements as of September 30, 1998 and for the three and six months ended
     September 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.

     EARNINGS PER SHARE. The Company adopted Statement of Accounting Standards
     Board (SFAS) No. 128, "Earnings per Share" effective December 28, 1997.
     This pronouncement requires the presentation of both basic and diluted
     earnings per share ("EPS"). Basic 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. Dilutive common equivalent shares include
     "in the money" stock options to the extent that such common equivalent
     shares are not anti-dilutive. The Company has restated net income (loss)
     per share for the three and six months ended September 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 first-in, first-out
     cost or market. On September 30, 1998 inventories consisted of:

<TABLE>
<CAPTION>
                                              September 30,         March 31,
     (in thousands)                               1998                1998
                                              -------------         ---------
<S>                                           <C>                   <C>   
     Purchased parts                             $   --              $   --
     Work in process                                 --                  --
     Finished goods                                  18               2,351
                                                 ------              ------
        Total inventories                        $   18              $2,351
                                                 ======              ======
</TABLE>



                                       6
<PAGE>   7

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 
 (Continued)                                         



3.   LINE OF CREDIT

     The Company had a line of credit agreement with a bank expiring in April
     1999. As a result of the Company's sale of its modem operations, the line
     of credit has been suspended. 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 installment payment due on September 30, 1998 was
     received October 2, subsequent to the balance sheet date, and therefore is
     not reflected as a reduction of the note receivable balance on September
     30, 1998. 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 ended June 30, 1998, the Company recorded a net gain of
     $6.1 million on the sale of its modem operations.

     The full effect of the sale of the modem operations to Boca was recorded
     during the quarter ended June 30, 1998. The assets purchased by Boca
     included products which represented the overwhelming majority of the
     Company's revenues and gross profit. These products did not contribute to
     the Company's reported net revenue or gross profit for the quarter ended
     September 30, 1998. For the six months ended September 30, 1998, these
     products accounted for approximately 97% of the Company's reported net
     revenue and 92% of reported 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 segregated from, nor
     accounted separately from, the other activities of the Company. Therefore,
     the Company is unable to accurately determine 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 communications servers
     for small and medium size offices and a change of its name to OneWorld
     Systems, Inc. During the first quarter of fiscal 1999, the Company recorded
     a restructuring charge of approximately $404,000 comprised of additional
     one-time costs for severance and employees 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
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 
 (Continued)                                         


7.   EARNINGS PER SHARE

     The following table presents the calculation of basic and diluted earnings
     per share pursuant to SFAS No. 128:

<TABLE>
<CAPTION>
                                                        Three months ended          Six months ended 
 (in thousands, except per share data)                     September 30,              September 30,
                                                      ----------------------      ----------------------
                                                        1998          1997          1998          1997
                                                      --------      --------      --------      --------
<S>                                                   <C>           <C>           <C>           <C>      
Net loss from continuing operations                   $ (2,457)     $    (52)     $   (312)     $ (2,027)
Income from discontinued operations                         --            --            90            --
                                                      --------      --------      --------      --------
    Net loss                                          $ (2,457)     $    (52)     $   (222)     $ (2,027)
                                                      ========      ========      ========      ========

Weighed average shares used in:
    Basic per share computations                        17,179        16,979        17,171        16,935
    Dilutive effect of stock options                        --            --            --            --
                                                      --------      --------      --------      --------
    Diluted per share computations                      17,179        16,979        17,171        16,935
                                                      ========      ========      ========      ========

Anti-dilutive common stock equivalants not
included in the diluted per share computations:
    "In the money" dilutive stock options                  104           512           195           528
                                                      ========      ========      ========      ========

Basic per share data:
    Loss per share from continuing operations         $  (0.14)     $  (0.00)     $  (0.02)     $  (0.12)
    Income per share from discontinued operations           --            --          0.01            --
                                                      --------      --------      --------      --------
       Net loss per share                             $  (0.14)     $  (0.00)     $  (0.01)     $  (0.12)
                                                      ========      ========      ========      ========

Diluted per share data:
    Loss per share from continuing operations         $  (0.14)     $  (0.00)     $  (0.02)     $  (0.12)
    Income per share from discontinued operations           --            --          0.01            --
                                                      --------      --------      --------      --------
       Net loss per share                             $  (0.14)     $  (0.00)     $  (0.01)     $  (0.12)
                                                      ========      ========      ========      ========
</TABLE>



                                       8
<PAGE>   9

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") provides simple,
easy-to-use wide-area communication solutions to help businesses communicate
efficiently and cost effectively. The Company designs, develops, manufactures
and sells integrated client and server hardware and software solutions for the
growing communication needs of small and medium-sized businesses and offices.
The Company's recently released 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. Founded in 1989 as Global Village Communication, Inc.,
OneWorld Systems is the only supplier of communication solutions that integrate
fax services, Internet and remote access for Windows and mixed Windows/Mac
personal computer environments.

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 sized 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 newly
released 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 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 is the first product of its kind to offer all these
capabilities simultaneously to both Windows and Macintosh users.

The Company began shipping the OneWorld 5000 Suite server in late September
1998. The Company's planned shipment of other versions of its server products is
dependent upon the completion of the development of these products. The Company
may have difficulty resolving 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 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 has been 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 maintaining and expanding 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.



                                       9
<PAGE>   10

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.

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 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.

<TABLE>
<CAPTION>
                                           Three months ended                  Six months ended 
(in thousands)                                September 30                        September 30
                                        ------------------------            ------------------------
                                         1998              1997              1998              1997
                                        ------            ------            ------            ------
<S>                                     <C>               <C>               <C>               <C>   
Total net revenue                          353            17,100            12,718            33,007
                                        ======            ======            ======            ======
Percent decrease compared to
    prior fiscal year period                      -98%                                -61%
                                        ------------------------            ------------------------
</TABLE>


The decrease in net revenue for the second quarter of fiscal 1999 and the six
months ended September 30, 1998 as compared to the same period in fiscal 1998
was primarily attributable to the Company's sale of its modem operations. Net
revenue for the three month period ended September 30, 1998 was primarily
attributable to the Company's legacy products retained after the sale of the
modem business. The Company sold no modem business products after the close of
the transaction with Boca Research on June 18, 1998.

During the quarter ended September 30, 1998, the Company's two largest customers
accounted for approximately 33% and 10%, respectively, of the Company's net
revenue.

International net revenue decreased to approximately $59,000 or 17% of net
revenues for the second quarter of fiscal 1999 from $1.6 million or 9% of net
revenue for the second quarter of fiscal 1998. The decrease in net international
revenues is primarily attributable to the Company's sale of its modem operations
during the prior quarter. For the six month period ended September 30, 1998
international revenue increased 50% to $6.2 million or 48% of net revenues from
$4.1 million or 12 % of net revenues for the same period in fiscal 1998. The
increase in international revenue was primarily due to an increase in
international OEM modem product shipments made during the first quarter of
fiscal 1999. The Company is concentrating its launch of its new OneWorld 5000
server in the United States and Canada only. Therefore, the Company does not
anticipate significant international net revenues in the near future. The
preceding sentence discussing the anticipated levels of international revenue is
a forward-looking statement.



                                       10
<PAGE>   11

Revenue reserves and allowances are established for estimated future returns due
to end-user returns, stock balancing and discontinued and nonsellable 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

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 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 was:

<TABLE>
<CAPTION>
                                                 Three months ended               Six months ended 
(in thousands)                                      September 30                    September 30
                                                1998            1997            1998            1997
                                               ------          ------          ------          ------
<S>                                            <C>             <C>             <C>             <C>   
Net revenue                                       353          17,100          12,718          33,007
Cost of revenue                                   129          12,038           9,678          22,354
                                               ------          ------          ------          ------
     Gross profit                                 224           5,062           3,040          10,653
                                               ======          ======          ======          ======
Gross profit percentage of net revenue             63%             30%             24%             32%
                                               ======          ======          ======          ======
</TABLE>


The gross margin increase in the second quarter of fiscal 1999 as compared to
the second quarter of fiscal 1998 is primarily due to the shift to higher margin
software and server products sold during the quarter compared to the relatively
lower margin modem products sold in the same period of fiscal 1998. The gross
profit margin decrease between the six months ended September 30, 1998 compared
to the six months ended September 30, 1997 was primarily attributable to price
reductions on certain of the Company's modem products, an increase in lower
margin OEM modem 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, changes in distribution
channels, as well as changes in component and production costs, price reductions
and reserve requirements.

EXPENSES

Operating expenses were comprised of the following:

<TABLE>
<CAPTION>
(in thousands)                            Three months ended September 30                     Six months ended September 30
                                            1998                     1997                    1998                      1997
                                    -------------------      --------------------     -------------------      ---------------------
                                              % of net                 % of net                 % of net                  % of net
                                       $       revenue         $        revenue         $        revenue         $         revenue
                                    ------    ---------      ------    ----------     ------    ---------      ------     ----------
<S>                                 <C>       <C>            <C>       <C>            <C>       <C>            <C>        <C>
Research and development             1,082         307%       2,722          16%       3,619          28%       5,144          16%
Marketing and sales                    854         242%       3,210          19%       3,635          29%       7,003          21%
General and administrative             838         237%       1,043           6%       1,949          15%       2,451           7%
Restructure costs                       --         -- %          --         -- %         404           3%          --         -- %
                                    ------                   ------                   ------                   ------
      Total operating expenses       2,774                    6,975                    9,607                   14,598
                                    ======                   ======                   ======                   ======
</TABLE>


RESEARCH AND DEVELOPMENT

Research and development expenses for the second quarter of fiscal 1999
decreased 60% compared to the second quarter of fiscal 1998. Research and
development expenses decreased 30% for the six months ended September 30 as
compared to the same period in the prior fiscal year. The decrease in research
and development expenses is primarily related to reductions in headcount and
manufacturing support costs resulting from the sale of the Company's modem
operations to Boca Research.



                                       11
<PAGE>   12

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 73% between the second quarter of fiscal
1999 and the second quarter of fiscal 1998, and a decrease of 48% when comparing
the six month periods ended September 30 of each year presented. The decline in
fiscal 1999 expenses was primarily attributable to 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 20% when comparing both the
quarterly results for the second quarter of fiscal 1999 compared to fiscal 1998
and the results for the six month period ended September 30, 1998 compared to
the six month period ended September 30, 1997. The decrease was primarily
attributable to a reduction in personnel costs associated with the sale of the
modem operations.

FACILITIES COSTS

As a result of restructuring and the sale of its modem business, the Company has
sublet excess space in its facilities. During the quarter ended September 30,
1998 sublet rental receipts exceeded facilities rent expenditures. The Company
anticipates that sublet income will in part offset facilities rent expense in
the future, however, there can be no guarantee that net rental income will be
achieved. The Company may experience an adverse result in its sublet activities
if there is a change in the Company's spatial requirements or its ability to
attract and retain qualified tenants.

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 employees 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. No additional
restructuring charges were recognized in the second quarter of 1999.

NET OTHER INCOME

<TABLE>
<CAPTION>
(in thousands)                               Three months ended September 30                Six months ended September 30
                                                1998                   1997                  1998                   1997
                                         ------------------     ------------------     ------------------     -------------------
                                                  % of net               % of net               % of net                % of net 
                                            $      revenue         $      revenue        $       revenue         $       revenue
                                         ------   ---------     ------   ---------     ------   ---------     ------    ---------
<S>                                      <C>      <C>           <C>      <C>           <C>      <C>           <C>       <C>
Other income, net
      Gain on sale of modem business         --         --%         --         --%      6,128         48%         --         --%
      Gain on sale of investments            --         --%      1,617          9%         --         --%      1,617          5%
      Other income, net                      93         26%        244          1%        105          1%        301          1%
                                         ------     ------      ------     ------      ------     ------      ------     ------
      Total other income, net                93         26%      1,861         10%      6,233         49%      1,918          6%
                                         ======     ======      ======     ======      ======     ======      ======     ======
</TABLE>

Other net income for the three and six month period ended September 30, 1998
consisted primarily of imputed interest income on the note receivable from Boca
Research. Net other income in the six month period ended September 30, 1998
included a net gain on sale of the Company's modem operations of $6.1 million
recorded during the quarter ended June 30, 1998. On June 18, 1998, the Company
completed the sale of its modem operations to Boca Research (see note 5 of the
Notes to Condensed Consolidated Financial Statements).



                                       12
<PAGE>   13

Additionally, other net income for the three and six month periods ended
September 30, 1997 included a net gain on the sale of the Company's investments
in GlobalCenter, Inc. and AirMedia, Inc.

The effective tax rate for the second quarter of fiscal 1999 was zero, unchanged
from the second quarter of fiscal 1998. The effective tax rate for the six month
period ended September 30, 1998 was 7%, an increase from zero for the six month
period ended September 30, 1997. The increase relates to refunds of prior
periods state income taxes.


LIQUIDITY AND CAPITAL RESOURCES

The Company's cash and cash equivalents totaled $1.5 million at September 30,
1998, representing 18% of total assets. The Company's working capital was $3.8
million at September 30, 1998 as compared to $0.2 million at March 31, 1998, an
increase of $3.6 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 September 30, 1998, the Company's principal source of liquidity was $1.5
million in cash and future payments of the note receivable from Boca Research,
Inc. (see note 5 of the Notes to Condensed Consolidated Financial Statements).

During September 1998, the Company and Boca Research discussed restructuring the
obligations owing to the Company. No agreement was reached regarding any
restructuring, and the Company received the first installment of $3.0 million on
October 2, 1998. The Company expects to continue discussions regarding the
second payment due December 31, 1998. However, there can be no assurance that
the second payment will be received in a timely manner or at all. Failure to
receive the second payment when due could have a material adverse affect on the
Company's business, financial condition and results of operations.

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 note receivable related to 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 sentences anticipating
future cash receipts and requirements are forward-looking statements. The
Company's funding requirements may change at any time due to various factors,
including the Company's operating results, the timing and receipt of any amounts
owing on its note receivable, the results and timing of the Company's launch of
new products and services, the market acceptance of these new products, 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 risk of Year 2000 software failures. The
Company has commenced, but not yet completed, its evaluation of the Year 2000
issue and is in the process of identifying the areas in which the Company may
have exposure in the systems utilized by the Company to operate its business,
systems used by key suppliers and customers, and OneWorld produced products.

The Company has assessed the impact on its corporate information system for Year
2000 issues and has determined that the Company's current information system
will not accommodate dates after 1999. The Company plans to adopt a new system
or upgrade its existing system within the next 12 months. Although the Company
has not yet purchased the new system, it believes that the cost will not exceed
$200,000. The Company does not expect delays in the implementation of a new
information system, however, there is a risk of not having sufficient time and
internal and external human resources to be fully operational on a new business
information system in a timely manner. The Company is exploring an interim
solution should the December 31, 1999 deadline not be achievable. The Company
believes that the transition to a new system or the implementation of an interim
solution will not cause any material disruption in its business.



                                       13
<PAGE>   14

Additionally, the Company is in the process of reviewing the Year 2000 exposure
with its customers, suppliers and other business partners. There can be no
assurance made that all the systems of its customers, suppliers and other
business partners will be Year 2000 compliant on a timely basis, or at all. If
these third parties' systems are not compliant, the Company could experience
delays in customers orders or in obtaining supplies, materials and finished
products from the Company's vendors.

The Company has commenced efforts to ensure that all products that the Company
currently produces will be fully Year 2000 compliant. 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 operates 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 Right Fax, Omtool, Castelle, 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. 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 



                                       14
<PAGE>   15

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 failure to increase unit sales or make up for a shortfall 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 continues 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 distributes 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 



                                       15
<PAGE>   16

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

The Company is concentrating its launch of its new OneWorld 5000 server in the
United States and Canada only and currently has no near term plans for
addressing other international markets for these products. If the Company were
to offer the OneWorld 5000 communications server internationally, there can be
no assurance that the Company will be able to attain international demand for
the its 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.



                                       16
<PAGE>   17

                           PART II. OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS    -  Not applicable.

ITEM 2.  CHANGES IN SECURITIES/RECENT SALES OF UNREGISTERED SECURITIES 
         - Not applicable

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES  -  Not applicable.

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

The Company held its annual meeting of Stockholders on August 20, 1998. The
following matters were approved by the stockholders by the votes indicated:

<TABLE>
<CAPTION>
                                                   Total Votes For             Total Votes Withheld
Matter:                                             Each Director               From Each Director
-------------------------------------------   ---------------------------   ----------------------------
<S>                                           <C>                           <C>    
Election of directors:
          Neil Selvin                                15,362,956                     231,873
          Leonard A. Lehmann                         15,362,956                     231,873
          Kevin R. Compton                           15,362,956                     231,873
          Eugene Eidenberg                           15,362,956                     231,873
          Kenneth A. Goldman                         15,362,956                     231,873
</TABLE>


<TABLE>
<CAPTION>
                                                                   Number of Shares
                                              ----------------------------------------------------------
                                                                                              Broker
Other Matters:                                    For          Against         Abstain       Non-Vote
-------------------------------------------   ------------   ------------    ------------   ------------
<S>                                           <C>            <C>             <C>            <C>      
To approve an amendment to the 1991 Stock       4,315,642      1,378,674         243,414      9,854,539
Option Plan to increase the number of
shares of Common Stock authorized for
issuance thereunder by 1,600,000 shares.

To approve an amendment of the 1994            14,527,870        981,747         282,652             --
Non-Employee Directors' Stock Option Plan
increasing the annual grants thereunder
and to approve the grant of certain
options.

To ratify the selection of KPMG Peat           15,598,814         96,566          96,889             --
Marwick LLP as independent auditors of
the Company for its fiscal year ending
March 31, 1999.

To transact other such business as may         14,813,176        622,092         357,001             --
properly come before the meeting.
</TABLE>

ITEM 5.  OTHER INFORMATION -  Not applicable.



                                       17
<PAGE>   18

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a)     Exhibits

      10.2        1991 Stock Option Plan, as amended (the "Option Plan")

      10.12       1994 Non-Employee Directors' Stock Option Plan, as amended
                  (the "Directors' Plan")

      27.1        Financial Data Schedule

(b)     Reports on Form 8-K

         The Company has not filed any reports on Form 8-K during the quarter
         ended September 30, 1998.


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


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




                                       18
<PAGE>   19
                               INDEX TO EXHIBITS



<TABLE>
<CAPTION>
     Exhibit
     Number                   Description
     ------                   -----------
<S>               <C>
      10.2        1991 Stock Option Plan, as amended (the "Option Plan")

      10.12       1994 Non-Employee Directors' Stock Option Plan, as amended
                  (the "Directors' Plan")

      27.1        Financial Data Schedule
</TABLE>