<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 JUNE 30, 1997

                                       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 June 30, 1997 was
16,978,313.



<PAGE>   2



                       GLOBAL VILLAGE COMMUNICATION, INC.

                                    FORM 10-Q

                  FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1997

                                TABLE OF CONTENTS


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

  Item 1.  Consolidated Financial Statements

             a)  Condensed Consolidated Balance Sheets
                 as of June 30, 1997 and March 31, 1997...................... 3

             b)  Condensed Consolidated Statements of Operations
                 for the three months ended June 30, 1997 and 1996........... 4

             c)  Condensed Consolidated Statements of Cash Flows
                 for the three months ended June 30, 1997 and 1996........... 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 6.  Exhibits and Reports on Form 8-K................................. 18

SIGNATURES.................................................................. 19
</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>
                                                        June 30, 1997  March 31, 1997
                                                        -------------  --------------
                                                         (unaudited)     (audited)
<S>                                                        <C>            <C>
ASSETS
Current assets:
     Cash and cash equivalents                             $ 3,098        $ 9,687
     Accounts receivable, net                                8,764          4,324
     Inventories, net                                        2,528          2,071
     Income tax receivable                                      --          7,665
     Other current assets                                      559            343
                                                           -------        -------
         Total current assets                               14,949         24,090
                                                           -------        -------

Property and equipment, net                                  6,106          6,929
Investment in AirMedia, Inc.                                 4,043          4,043
Other assets                                                    84            138
                                                           -------        -------
         Total assets                                      $25,182        $35,200
                                                           =======        =======


LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
    Line of credit borrowings                              $    --        $ 4,241
    Accounts payable                                        12,607         15,971
    Accrued and other liabilities                            7,093          7,638
                                                           -------        -------
         Total current liabilities                         $19,700         27,850
                                                           -------        -------

  Stockholders' equity                                       5,482          7,350
                                                           -------        -------
         Total liabilities and stockholders' equity        $25,182        $35,200
                                                           =======        =======
</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 JUNE 30,
                                                        1997            1996
                                                      --------        --------
<S>                                                   <C>             <C>
Net revenue                                           $ 15,907        $ 28,443
Cost of revenue                                         10,316          21,726
                                                      --------        --------
Gross profit                                             5,591           6,717
                                                      --------        --------
Operating expenses:
     Research and development                            2,422           3,361
     Marketing and sales                                 3,793           7,533
     General and administrative                          1,408           1,371
     Loss from investment in GlobalCenter, Inc.             --           2,191
                                                      --------        --------
          Total operating expenses                       7,623          14,456
                                                      --------        --------
Loss from operations                                    (2,032)         (7,739)
Other income, net                                           57             230
                                                      --------        --------
Loss before income taxes                                (1,975)         (7,509)
Provision for income taxes (benefit)                        --          (2,703)
                                                      --------        --------
Loss from continuing operations                         (1,975)         (4,806)
Loss from discontinued operations                           --            (257)
                                                      --------        --------
Net loss                                              $ (1,975)       $ (5,063)
                                                      ========        ========

Loss per share from continuing operations             $  (0.12)       $  (0.29)
Loss per share from discontinued operations                 --           (0.01)
                                                      --------        --------
Net loss per share                                    $  (0.12)       $  (0.30)
                                                      ========        ========

Shares used in computing per share amounts              16,933          16,809
                                                      ========        ========
</TABLE>



     See accompanying Notes to Condensed Consolidated Financial Statements.





                                       4
<PAGE>   5


                       GLOBAL VILLAGE COMMUNICATION, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)
                                   (unaudited)


<TABLE>
<CAPTION>
                                                                  THREE MONTHS ENDED JUNE 30,
                                                                     1997            1996
                                                                    -------        --------
<S>                                                                 <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
    Net loss                                                        $(1,975)       $ (5,063)
    Adjustments to reconcile net loss
       to net cash provided by operating activities:
        Depreciation and amortization                                   938             697
        Write-off of GlobalCenter, Inc. investment                       --           2,191
    Changes in assets and liabilities:                                   
        Accounts receivable, net                                     (4,440)         (6,883)
        Inventories                                                    (457)         (1,826)
        Income taxes                                                  7,665          (2,703)
        Other current assets                                           (216)           (451)
        Accounts payable                                             (3,364)          1,972
        Accrued and other liabilities                                  (545)         (1,321)
                                                                    -------        --------
    Net cash used in operating activities of:
        Continuing operations                                        (2,394)        (13,387)
        Discontinued operations                                          --            (899)
                                                                    -------        --------
            Net cash used in operating activities                    (2,394)        (14,286)
                                                                    -------        --------
CASH FLOWS FROM INVESTING ACTIVITIES:
        Purchases of property and equipment                            (115)           (975)
        Other assets                                                     54             (28)
        Purchases of short-term investments                              --         (18,596)
        Proceeds from sales and maturities of short-term                 --          31,178
        investments
        Investment in AirMedia, Inc.                                     --            (900)
        Investment in GlobalCenter, Inc.                                 --          (1,547)
                                                                    -------        --------
            Net cash provided by (used in) investing activities         (61)          9,132
                                                                    -------        --------

CASH FLOWS FROM FINANCING ACTIVITIES:
    Repayments under line of credit                                  (4,241)             --
    Proceeds from issuance of Common Stock, net                         107             586
                                                                    -------        --------
            Net cash  provided by (used in) financing activities     (4,134)            586
                                                                    -------        --------
    Effect of exchange rate changes on cash and cash equivalents         --              33
                                                                    -------        --------

Net decrease in cash and cash equivalents                            (6,589)         (4,535)
Cash and cash equivalents at beginning of period                      9,687          15,900
                                                                    -------        --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD                          $ 3,098        $ 11,365
                                                                    =======        ========

Supplemental disclosures:
    Cash paid during the period for:
        Interest                                                    $   104        $      8
        Income taxes                                                $    --        $     44
    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 June 30, 1997 and
for the three months ended June 30, 1997 and 1996, 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, 1997.

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 LOSS PER SHARE

Net loss per share data has been computed using net loss and the weighted
average number of shares of Common Stock outstanding.

3.  INVENTORIES
    (in thousands)

<TABLE>
<CAPTION>
                                   June 30, 1997         March 31, 1997
                                   -------------         --------------
<S>                                   <C>                    <C>
    Purchased parts                   $  462                 $  199
    Work in process                       --                    369
    Finished goods                     2,066                  1,503
                                       -----                 ------
                                      $2,528                 $2,071
                                      ======                 ======
</TABLE>

4.  LINE OF CREDIT

The Company has a line of credit agreement with a bank which expires in April
1999. Borrowings under the agreement bear interest at the bank's prime rate plus
2.5%. The total borrowings are limited to the lesser of $5,000,000 or 80% of
eligible receivables, as defined, and are collateralized by all of the Company's
assets. The agreement contains various financial covenants and restrictions,
including restrictions on the Company's ability to pay dividends or to effect
mergers or acquisitions. As of June 30, 1997, there were no borrowings under
this line of credit and the Company was in compliance with all covenants and
restrictions.

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
(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.




                                       6
<PAGE>   7

6.  RECENT ACCOUNTING PRONOUNCEMENTS

In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 128, "Earnings per Share." SFAS No.
128 requires dual presentation of basic earnings per share ("EPS") and diluted
EPS on the face of all statements of operations issued after December 15, 1997,
for all entities with complex capital structures.

Basic EPS is computed using net earnings divided by the weighted-average number
of common shares outstanding for the period. Diluted EPS reflects the potential
dilution that could occur from common shares issuable through stock-based
compensation including stock options, restricted stock awards, warrants, and
other convertible securities using the treasury stock method. The Company
expects basic EPS for profitable periods will be higher than primary EPS as
previously reported and diluted EPS for profitable periods will not differ
materially from primary EPS as reported. Computations for loss periods should
not change significantly.

In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive Income".
This Statement establishes standards for reporting and displaying comprehensive
income and its components in the financial statements. It does not, however,
require a specific format for the statement, but requires the Company to display
an amount representing total comprehensive income for the period in that
financial statement. The Company is in the process of determining its preferred
format. This Statement is effective for fiscal years beginning after December
15, 1997.

Also, in June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments of
an Enterprise and Related Information." The Statement establishes standards for
the manner in which public business enterprises report information about
operating segments in annual financial statements and requires those enterprises
to report selected information about operating segments in interim financial
reports issued to stockholders. This Statement is effective for financial
statements for periods beginning after December 15, 1997, and is not expected to
have a significant impact on the Company's reporting of segment information.

7.  SUBSEQUENT EVENTS

On July 31, 1997, the Company sold substantially all of its investment in
AirMedia, Inc., to an existing shareholder of AirMedia. Consideration of
approximately $2.0 million in cash was received during the second quarter of
fiscal 1998. As a result, the Company will record a net loss of approximately
$2.1 million on its investment in AirMedia in the second quarter of fiscal 1998.




                                       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, 1997. 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") is a
leader in the design, development and marketing of easy-to-use integrated
communications products 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-to medium-sized organizations to
access the Internet and other information services, connect to a remote
organization's internal network, send and receive faxes and e-mail from their
computers and communicate efficiently with colleagues, customers and suppliers.

Global Village produces modems, telecommunications servers, and proprietary
communications software for both individual users and network users.

The Company's individual-use system products include TelePort modems for
Macintosh and Windows desktop computer users, PC Card modems (including
PowerPort) for Macintosh PowerBook and Windows portable computer users, and
NewsCatcher, a wireless information display accessory for desktop Windows users.
The Company's modem and wireless products for Macintosh and Windows based
personal computers are characterized by a highly integrated, proprietary
software and hardware design which makes computer communications easy for the
average user.

The Company's line of network products includes FaxWorks Server NT and FaxWorks
Pro LAN, software for providing fax services to office workgroups utilizing
Windows NT, Windows 3.1, and OS/2 operating systems. The OneWorld series of
telecommunication server systems for Macintosh provides shared fax, dial-out
modem, and remote network access capabilities to small workgroups.

The Company's core software technologies, FaxWorks communications software for
Windows, OS/2 and DOS operating systems, GlobalFax communications software for
Macintosh systems, and embedded software underlying Global Village's server
systems, provide a consistent, user-friendly interface across individual and
network product lines. For Windows, the Company also provides integrated
communication software to original equipment manufacturers (OEMs).

The Company has in the past 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 or enhancement
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;
introductions of new technologies or standards; seasonality of revenues;
customer order deferrals, accelerations, and payments of accounts receivable in
anticipation of new products; changes in the Company's operating expenses;
performance of the Company's distributors and





                                       8
<PAGE>   9

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 an indication of future performance.

Moreover, the industry in which the Company competes generally is subject to
short product life cycles. In this regard, the Company traditionally has
experienced a reduction in the average selling prices of its products as the
time from product introduction elapses. The Company routinely institutes
significant price reductions and/or rebates with respect to its products and
expects that competitive pressures will continue to necessitate price
reductions. This is illustrated by the decline in the suggested retail price of
the Company's TelePort Platinum product from $171 to $139 during the 1997 fiscal
year. In particular, the Company expects the trend of reduced average selling
prices for its individual use products to continue during fiscal 1998. There can
be no assurance that the trend of reduced average selling prices will not
accelerate during fiscal 1998.

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 products. 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 in 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 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 for 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 in part on the successful development,
introduction and customer acceptance of new and enhanced versions of its
TelePort and PC Card products (including PowerPort), the Company's ability to
successfully reduce or control various operating expenses as well as the
Company's ability to generate increased sales of products for Windows based
computers, or other products. Though the Company continually seeks to further
enhance its products 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




                                       9
<PAGE>   10

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.

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 Texas Instruments. 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. Any failure of such
a supplier to meet such requirements could have a material adverse effect on the
Company's business and results of operations and working capital.

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 June 30,
                                                   ---------------------------
                                                       1997          1996
                                                    -----------   -----------
                                                    (unaudited)   (unaudited)
<S>                                                     <C>           <C>
Net revenue                                             100%          100%
Cost of revenue                                          65            76
                                                       ----          ----
Gross profit                                             35            24
                                                       ----          ----
Operating expenses:
     Research and development                            15            12
     Marketing and sales                                 24            26
     General and administrative                           9             5
     Loss from investment in GlobalCenter, Inc.          --             8
                                                       ----          ----
          Total operating expenses                       48            51
                                                       ----          ----

Loss from operations                                    (13)          (27)
Other income, net                                         1             1
                                                       ----          ----
Loss before income taxes                                (12)          (26)

Provision for income taxes (benefit)                     --            (9)
                                                       ----          ----
Loss from continuing operations                         (12)          (17)
Loss from discontinued operations                        --            (1)
                                                       ----          ----

Net loss                                                (12)%         (18)%
                                                       ====          ====
</TABLE>


NET REVENUE

Net revenue includes revenue from gross shipments, licenses and royalties, less
reserves for returns and allowances. Net revenue decreased 44% to $15.9 million
for the first quarter of fiscal 1998 from $28.4 million for the first quarter of
fiscal 1997. The decrease in net revenue was primarily attributable to two
factors. The first was reduced shipments of TelePort and PowerPort products
which were adversely




                                       10
<PAGE>   11

affected by the technology transition to 56Kbps modems and the effect of
continued weakness in the market for Apple computer products. Lower unit
shipments of Apple's computers reduced demand for the Company's products.
Second, the Company's OEM business has decreased significantly compared with the
first quarter of fiscal 1997 due to the loss of Apple OEM business.

International revenue decreased to $2.5 million or 16% of net revenues for the
first quarter of fiscal 1998 compared to $3.7 million or 13% for the first
quarter of fiscal 1997. The decline was primarily attributable to the continued
weakness in the market for Apple products.

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 increased to 35% in
the first quarter of fiscal 1998 from 24% in the first quarter of fiscal 1997.
The gross profit margin increase was primarily attributable to the adverse
revenue impact, in the first quarter of fiscal 1997, of Apple'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, price reductions
and reserve requirements. 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.

Research and development expenses decreased 28% to $2.4 million or 15% of net
revenues for the first quarter of fiscal 1998 from $3.4 million or 12% of net
revenues in the comparable quarter of fiscal 1997. The decline in research and
development expenses is primarily related to a reduction in personnel costs.

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 expenses decreased 50% to $3.8 million or 24% of net
revenues in the first quarter of fiscal 1998 compared to $7.5 million or 26% of
net revenues during the same period of fiscal 1997. The decline is fiscal 1998
expenses was primarily attributable to reduced advertising and promotion
expenses and lower personnel costs.

General and administrative expenses were essentially flat at $1.4 million
between the first quarter of fiscal 1997 and the first quarter of fiscal 1998.
General and administrative expenses increased as a percentage of




                                       11
<PAGE>   12

net revenues to 9% of net revenues for first quarter of fiscal 1998 from 5% of
net revenues for the same period of fiscal 1997.

In April 1996, Global Village announced that it had 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. At that time, the Company no longer had the
ability to exercise significant control over GlobalCenter. Accordingly, the
Company no longer consolidated the results of GlobalCenter and began to account
for its investment using the equity method of accounting. As a result of the
refinancing and operating performance of GlobalCenter during the first quarter
of fiscal 1997, the Company recorded an investment loss of $2.2 million and
reduced the book value of its investment to zero. In December 1996, GlobalCenter
entered into a definitive merger agreement whereby GlobalCenter and
Phoenix-based Primenet Services for the Internet, Inc. merged, reducing the
Company's percentage ownership below 10%. Accordingly, in the third quarter of
fiscal 1997, the Company began accounting for its investment in GlobalCenter
using the cost method of accounting. The Company's investment balance as of June
30, 1997 remains at zero.

Net other income declined to $.1 million for the first quarter of fiscal 1998
from $.2 million for the first fiscal quarter of 1997. Net other income
represented 1% of net revenues for the first fiscal quarter of both 1998 and
1997.

The Company's effective tax rates for the first quarter of fiscal 1998 was zero
as compared to 36% in the first quarter of fiscal 1997.


LIQUIDITY AND CAPITAL RESOURCES

The Company's cash and cash equivalents totaled $3.1 at June 30, 1997,
representing 12% of total assets. The Company's working capital deficit was $4.8
million at June 30, 1997 as compared to a deficit of $3.8 million at March 31,
1997, an increase of $1.0 million. The increase in working capital deficit was
primarily attributable to the net loss for the quarter offset by depreciation
and amortization.

At June 30, 1997, the Company's principal source of liquidity was $3.1 million
in cash and an unused line of credit which allows the Company to borrow up to
the lower of $5.0 million or 80% of eligible accounts receivable (see Note 4).

The Company does not expect fiscal 1998 capital expenditures to exceed
historical levels and may possibly be reduced. During the past several quarters,
the Company has experienced significant negative cash flows. However, the
Company currently believes that its existing cash, credit facility and cash
proceeds from the sale of its investment in AirMedia, Inc. of $2.0 million (see
Note 7), should enable the Company to meet its cash requirements for at least
the next twelve months. The preceding sentence is a forward-looking statement.
The Company's funding requirements may change at any time due to various
factors, including the Company's operating results, the results and timing of
the Company's launch of new products and services, the Company's ability to
reduce or control various operating expenses through cost containment measures
or operating reductions, the success of the Company's marketing efforts,
technological advances and competition. The Company may be required to issue
additional debt or equity securities which could substantially dilute the
ownership of existing stockholders. Any shortfall in funding could result in the
Company having to curtail the introduction or development of new products and
its entry into new markets, any of which could have a material adverse affect on
the Company's business, financial condition and results of operations.




                                       12
<PAGE>   13

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 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-down inventory that it considers
to be excessive or obsolete, the Company has in the past recorded inventory
write-downs in excess of available reserves. There can be no assurance that the
Company's recorded allowances for such write-downs will be adequate in the
future, and material write-downs 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.

MARKET ANTICIPATION OF NEW PRODUCTS, NEW TECHNOLOGIES OR STANDARDS, OR LOWER
PRICES

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, such as the
introduction of faster modem technologies, then this may have the effect of
temporarily slowing overall market demand and negatively impacting the Company's
operating results. For example, the recent industry announcements of modems
based on 56Kbps technology may have caused such an effect in the first quarter
of fiscal 1998. Moreover, the existence of two competitive implementations of
the new 56Kbps technology, X2 and K56Flex, may have the effect of confusing and
slowing the market. The existence of two competing protocols may result in
customers delaying purchases until a single standard emerges. Consequently,
delays in the market acceptance of new 56K technology based modems could have a
material adverse effect on the Company's business, financial condition and
results of operation.

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 on the
sale of Apple Macintosh computers and the development and sale of new Apple




                                       13
<PAGE>   14

computers. Due to continued weakness in demand for Apple products, 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 remain flat or 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 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 new desktop 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 has included
and 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.

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




                                       14
<PAGE>   15

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 CMC, 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 alternative subcontractors 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.

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 and price protection
allowances 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.



                                       15
<PAGE>   16


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
abilities 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.

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.

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. 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




                                       16
<PAGE>   17

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.



                           PART II. OTHER INFORMATION


ITEM 1. LEGAL PROCEEDINGS

        Not applicable.


ITEM 2. CHANGES IN SECURITIES

        Not applicable.


ITEM 3. DEFAULTS UPON SENIOR SECURITIES

        Not applicable.


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

        Not applicable.


ITEM 5. OTHER INFORMATION

        Not applicable.





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<PAGE>   18

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

        (a)  Exhibits

       11.1  Computation of Net Loss Per Share
       27.1  Financial Data Schedule

        (b)  Reports on Form 8-K

        The Company did not file any reports on Form 8-K during the quarter
ended June 30, 1997.






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<PAGE>   19



                                   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.



Date:  August 13, 1997                  /S/Neil Selvin
                                        -------------------------------------
                                        President and Chief Executive Officer


Date:  August 13, 1997                  /S/Marc E. Linden
                                        -------------------------------------
                                        Senior Vice President Finance
                                        and Business Development;
                                        Chief Financial Officer










                                       19
<PAGE>   20


                               INDEX TO EXHIBITS


<TABLE>
<CAPTION>
EXHIBIT
NUMBER                   EXHIBITS
------                   --------
<S>            <C>
 11.1          Computation of Net Loss Per Share

 27.1          Financial Data Schedule
</TABLE>