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

                          Commission File Number 1-8086

                        GENERAL DATACOMM INDUSTRIES, INC.
             (Exact name of registrant as specified in its charter)

   Delaware                                                  06-0853856
   State or other jurisdiction of          (I.R.S. Employer Identification No.)
   
   Middlebury, Connecticut                                  06762-1299
  (Address of principal executive offices                    (Zip Code)

         Registrant's phone number, including area code: (203) 574-1118

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

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of the latest practicable date: Number of Shares Outstanding


  Title of Each Class                                at June 30, 1997        

  Common Stock, $.10 par value                          19,020,693
  Class B Stock, $.10 par value                          2,136,933


                  Total Number of Pages in this Document is 21.

<PAGE>
               GENERAL DATACOMM INDUSTRIES, INC. AND SUBSIDIARIES
                                      INDEX
 



                                                                    Page No.

Part I.  Financial Information
           Consolidated Balance Sheets -
           June 30, 1997 and September 30, 1996                          3
           Consolidated Statements of Operations
           and Accumulated Deficit - For the Three and
           Nine Months Ended June 30, 1997 and 1996                      4
 
           Consolidated Statements of Cash Flows - For the               5
           Nine Months Ended June 30, 1997 and 1996
 
           Notes to Consolidated Financial Statements                    6

           Management's Discussion and Analysis
           of Financial Condition and Results of Operations             10


Part II.  Other Information

              Item 6.  Exhibits and Reports on Form 8-K                 19
 


                                  - 2 -

<PAGE>


                          PART I. FINANCIAL INFORMATION
                   
                                    
               GENERAL DATACOMM INDUSTRIES, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                            
                                       
                                                June 30,      September 30,     
In thousands except shares                        1997            1996         
-------------------------------------------------------------------------------
ASSETS:                                         (Unaudited)
Current assets:                                
  Cash and cash equivalents                      $2,405         $26,264 
  Accounts receivable, less allowance 
   for doubtful receivables of $1,713
   in June and $1,768 in September               30,245          39,828  
  Inventories                                    45,382          44,588  
  Deferred income taxes                           2,871           4,457   
  Other current assets                            8,369           7,054   
-------------------------------------------------------------------------------
Total current assets                             89,272         122,191 
-------------------------------------------------------------------------------
Property, plant and equipment, net               48,052          48,838  
Capitalized software development costs, net      23,500          23,393  
Other assets                                     10,549          10,632  
-------------------------------------------------------------------------------
                                               $171,373        $205,054        
-------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY:                           
Current liabilities:                           
  Current portion of long-term debt              $7,606          $6,533  
  Accounts payable, trade                        14,981          14,917  
  Accrued payroll and payroll-related costs       7,717           6,592   
  Deferred income                                 6,771           7,305   
  Other current liabilities                      17,693          19,211  
-------------------------------------------------------------------------------
Total current liabilities                        54,768          54,558  
-------------------------------------------------------------------------------
Long-term debt, less current portion             21,448          22,781  
Deferred income taxes                             3,455           4,962   
Other liabilities                                   423             567     
-------------------------------------------------------------------------------
Total liabilities                                80,094          82,868  
-------------------------------------------------------------------------------
Commitments and contingent liabilities               -                -       
Stockholders' equity:                          
 Preferred stock, par value $1.00 per share, 
  3,000,000 shares authorized; issued and 
  outstanding: 800,000 shares of 9% cumulative
  convertible exchangeable preferred stock with                          
  a $20 million liquidation preference              800             800     
 Class B stock, par value $.10 per share,
  35,000,000 shares authorized;                         
  issued and outstanding: 2,136,933 in 
  June and 2,137,443 in September                   214             214     
 Common stock, par value $.10 per share, 
  35,000,000 shares authorized; issued and 
  outstanding: 19,440,622 in June and 
  19,249,987 in September                         1,944           1,925   
 Capital in excess of par value                 149,421         148,208 
 Accumulated deficit                            (55,885)        (23,323)        
 Cumulative foreign currency translation 
  adjustment                                     (2,106)         (2,510) 
 Common stock held in treasury, at cost:                                
  419,929 shares in June and 422,429 shares
   in September                                  (3,109)         (3,128) 
-------------------------------------------------------------------------------
Total stockholders' equity                       91,279         122,186 
-------------------------------------------------------------------------------
                                               $171,373        $205,054        
-------------------------------------------------------------------------------
The accompanying notes are an integral part of these consolidated financial 
 statements.                         
                                        
                                       -3-

<PAGE>



               GENERAL DATACOMM INDUSTRIES, INC. AND SUBSIDIARIES
                    CONSOLIDATED STATEMENTS OF OPERATIONS AND
                               ACCUMULATED DEFICIT
                                   (Unaudited)

                                         Three Months Ended   Nine Months Ended 
                                               June 30,           June 30,
-------------------------------------------------------------------------------
In thousands, except per share data         1997      1996     1997      1996
-------------------------------------------------------------------------------
Revenues:
 Net product sales                         $35,262  $45,332  $123,500  $140,948
 Service revenue                            10,046    9,541    28,967    29,081
 Lease revenue                               1,278    1,696     3,933     5,509
------------------------------------------------------------------------------
                                            46,586   56,569   156,400   175,538
------------------------------------------------------------------------------
Costs and expenses:
 Cost of product sales                      17,693   22,771    59,702    67,690
 Amortization of capitalized
  software development costs                 3,000    3,000     9,000     8,600
 Cost of services                            6,519    6,473    20,131    19,731
 Cost of lease revenue                         152      174       481       670
 Selling, general and administrative        21,518   22,308    64,654    65,395
 Research and product development           10,582    8,738    30,897    24,258
-------------------------------------------------------------------------------
                                            59,464   63,464   184,865   186,344
------------------------------------------------------------------------------
Operating loss                             (12,878)  (6,895)  (28,465)  (10,806)
-------------------------------------------------------------------------------
Other income (expense):
 Interest                                     (637)    (473)   (1,475)   (1,360)
 Other, net                                   (205)     (99)     (972)      752
-------------------------------------------------------------------------------
                                              (842)    (572)   (2,447)     (608)
-------------------------------------------------------------------------------
Loss before income taxes                   (13,720)  (7,467)  (30,912)  (11,414)
Income tax provision                           100      300       300       900
-------------------------------------------------------------------------------
Net loss                                  ($13,820) ($7,767) ($31,212) ($12,314)
===============================================================================

Loss per share                              ($0.67)  ($0.37)   ($1.55)   ($0.60)
===============================================================================
Weighted average number of common and
common equivalent shares outstanding        21,148   20,797    21,063    20,656
===============================================================================
Accumulated deficit at beginning of
 period                                   ($41,615)($10,700) ($23,323)  ($6,153)
Net loss                                   (13,820)  (7,767)  (31,212)  (12,314)
Payment of preferred stock dividends          (450)       -    (1,350)    -
-------------------------------------------------------------------------------
Accumulated deficit at end of period      ($55,885)($18,467) ($55,885) ($18,467)
===============================================================================
The accompanying notes are an integral part of these consolidated financial
statements.

                                      - 4 -
                                                        
<PAGE>
                                                   
                                                       
               GENERAL DATACOMM INDUSTRIES, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)

                                                   Increase (Decrease) in Cash
                                                      and Cash Equivalents
                                                  ----------------------------
                                                        Nine Months Ended
                                                            June 30,
                                                  ----------------------------
In thousands                                             1997           1996
-----------------------------------------------------------------------------
Cash flows from operating activities:
Net(loss)                                            ($31,212)      ($12,314)
Adjustments to reconcile net loss to net cash
 provided by (used in) operating activities:
   Depreciation and amortization                       20,413         18,978
   Gain on sale of real estate                           -            (1,000)
   Decrease in accounts receivable                      8,881          2,829
   (Increase) in inventories                           (1,061)        (2,247)
   Increase (decrease) in accounts payable
    and accrued expenses                                 (460)         7,629
   (Increase) in other net current assets                (259)        (1,175)
   (Increase) in other net long-term assets            (1,729)          (301)
-------------------------------------------------------------------------------
Net cash provided by (used in) operating activities    (5,427)        12,399
-------------------------------------------------------------------------------
Cash flows from investing activities:
  Acquisition of property, plant, and equipment        (8,661)       (10,666)
  Capitalized software development costs               (9,107)        (8,586)
  Proceeds from sale of real estate                        -           1,000
-------------------------------------------------------------------------------
Net cash used in investing activities                 (17,768)       (18,252)
-------------------------------------------------------------------------------
Cash flows from financing activities:
  Proceeds from notes and mortgages                     5,584          4,740
  Principal payments on notes and mortgages            (5,830)       (11,445)
  Proceeds from issuing common stock                    1,133          2,556
  Payment of preferred stock dividends                 (1,350)             -
 ------------------------------------------------------------------------------
Net cash used in financing activities                    (463)        (4,149)
 ------------------------------------------------------------------------------
Effect of exchange rates on cash                         (201)           (84)
-------------------------------------------------------------------------------
Net decrease in cash and cash equivalents             (23,859)       (10,086)
Cash and cash equivalents at beginning of
 period - (1)                                          26,264         18,443
-------------------------------------------------------------------------------
Cash and cash equivalents at end of period - (1)       $2,405         $8,357
===============================================================================
(1) - The Corporation considers all highly liquid investments purchased with
a maturity of three months or less to be cash equivalents.

The accompanying notes are an integral part of these consolidated financial
 statements.

                                       -5-

<PAGE>

               GENERAL DATACOMM INDUSTRIES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)



NOTE 1. BASIS OF PRESENTATION

In the opinion of management,  the accompanying unaudited consolidated financial
statements contain all adjustments  necessary to fairly present the consolidated
financial  position of General DataComm  Industries,  Inc. and subsidiaries (the
"Corporation"  or "Company") as of June 30, 1997,  the  consolidated  results of
their operations for the three and nine months ended June 30, 1997 and 1996, and
their  cash  flows  for the nine  months  ended  June 30,  1997 and  1996.  Such
adjustments are generally of a normal recurring  nature and include  adjustments
to certain accruals and asset reserves to appropriate levels. 

The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect  the  reported  amounts  of assets  and  liabilities  and  disclosure  of
contingent  assets and  liabilities at the date of the financial  statements and
the  reported  amounts of revenues  and expenses  during the  reporting  periods
presented. Actual results could differ from those estimates. The markets for the
Company's products are characterized by intense competition, rapid technological
development,  and frequent new product introductions,  all of which could impact
the future value of the Company's inventory,  capitalized software,  and certain
other assets.

The  consolidated  financial  statements  contained  herein  should  be  read in
conjunction with the consolidated financial statements and related notes thereto
filed with Form 10-K for the year ended September 30, 1996.

NOTE 2.   INVENTORIES

          Inventories consist of (in thousands):

                                June 30, 1997               September 30, 1996
                                -------------               ------------------
           Raw materials           $15,783                        $16,627
           Work-in-process           5,163                          6,726
           Finished goods           24,436                         21,235
                                   -------                        -------
           Total                   $45,382                        $44,588


                                      - 6 -



<PAGE>

               GENERAL DATACOMM INDUSTRIES, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
                                   (Unaudited)


NOTE 3. PROPERTY, PLANT AND EQUIPMENT

        Property, plant and equipment consists of (in thousands):

                                        June 30, 1997        September 30, 1996
                                        -------------        ------------------

        Land                             $ 1,778                $ 1,764
        Buildings and improvement         29,740                 29,050
        Test equipment, fixtures and
         field spares                     54,788                 52,537
        Machinery and equipment           55,784                 50,482
                                         -------                -------
                                         142,090                133,833
        
       Less:  accumulated depreciation
        and amortization                  94,038                 84,995
                                         -------                -------
                                         $48,052                $48,838
 

NOTE 4. CAPITALIZED SOFTWARE DEVELOPMENT COSTS
 
        Capitalized software development costs consist of  (in thousands):

                                        June 30, 1997        September 30, 1996
                                        -------------        ------------------
        Original Cost                    $38,504                  $33,998
        Less: accumulated amortization    15,004                   10,605
                                         -------                  -------
                                         $23,500                  $23,393

NOTE 5. LONG-TERM DEBT

        Long-term debt consists of (in thousands):
        
                                        June 30, 1997        September 30, 1996
                                        -------------        ------------------
        Notes payable                    $16,908                $16,421
        Mortgages payable                 11,883                 12,359
        Capital lease obligations            263                    534
                                         -------                -------
                                          29,054                 29,314
        Less:  current portion             7,606                  6,533
                                         -------                -------
                                         $21,448                $22,781

                                      - 7 -

<PAGE>

               GENERAL DATACOMM INDUSTRIES, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
                                   (Unaudited)


Long-Term Debt -- continued 

Revolving Credit Facility
-------------------------

The Company has an amended  agreement  with the BNY  Financial  Corporation  (as
successor in interest to The Bank of New York  Commercial  Corporation)  whereby
the  Corporation  has been provided a revolving  credit  facility in the maximum
amount of $25.0  million,  subject to a borrowing  base  formula.  The facility,
which  matures in November  1998,  provides  for a sub-limit of $5.0 million for
letters of credit.  Certain assets of the  Corporation,  including most accounts
receivable and inventories,  are pledged as collateral.  The amount of borrowing
is  predicated  on  satisfying  a borrowing  base  formula  related to levels of
certain  accounts   receivable  and  inventories,   which  may  limit  available
borrowings  to less than  $25.0  million.  At June 30,  1997,  the total  amount
available for borrowings and letters of credit was $22.4 million.

The recently  amended  agreement  requires  conformity  with  various  financial
covenants  including,  among  others,  restricted  net  loss  performance.   The
amendment  also  increases the borrowing  rate by 1% and requires the Company to
raise at least $10.0  million from  proceeds of an equity  offering by September
30,  1997 and an  additional  $10.0  million  before  January  1,  1998 on terms
satisfactory to BNY Financial Corporation.

No  borrowings  were  outstanding  as of June 30,  1997.  There  were,  however,
$780,000  of letters of credit  outstanding  as of June 30,  1997.  The  Company
commenced utilizing the credit facility subsequent to June 30, 1997.  Borrowings
outstanding on the credit facility amounted to $7.3 million at August 7, 1997.

NOTE 6. FOREIGN CURRENCY TRANSLATION FOR MEXICAN OPERATIONS
        
As a result of high inflation in Mexico,  the Company was required to change its
method of  translating  the financial  statements  of its Mexican  subsidiary to
reflect  the  designation  of  the  U.S.  dollar  as  the  functional  currency.
Therefore,  effective January 1, 1997,  non-monetary  assets such as inventories
and property,  plant and equipment,  along with expenses  related  thereto,  are
being translated at historical rates of exchange, and adjustments resulting from
translation  are reflected in results of  operations.  Previously,  such amounts
were stated at current  rates of  exchange,  and  translation  adjustments  were
reported as a separate  component of  stockholders'  equity.  The impact of this
change was not  material to the  Company's  reported  financial  results for the
three or nine months ended June 30, 1997.


                                      - 8 -

<PAGE>

               GENERAL DATACOMM INDUSTRIES, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
                                   (Unaudited)



NOTE 7.   OTHER INCOME (EXPENSE)
 
Other  income  (expense)  for the quarter  and nine  months  ended June 30, 1997
includes  foreign  currency   exchange  losses  of  $(198,000)  and  $(907,000),
respectively.  The year-to-date exchange losses are principally  attributable to
the  strengthening  U.S. dollar as compared to the French franc and German mark,
and its impact on  liabilities of our French and German  subsidiaries  which are
payable in U.S.  dollars.  Such amounts compare to exchange losses of $(183,000)
and $(369,000) for the three and nine months ended June 30, 1996,  respectively.
Separately, other income for the nine months ended June 30, 1996 includes a $1.0
million gain from a real estate transaction.

NOTE 8. STATEMENT OF FINANCIAL ACCOUNTING STANDARDS NO.128,"EARNINGS PER SHARE"
 
In February 1997, The Financial  Accounting  Standards Board issued Statement of
Financial  Accounting  Standards No. 128, "Earnings Per Share" ("FAS 128" or the
"Statement"). The Company will adopt FAS 128 in the first quarter of fiscal 1998
(quarter to end on December 31, 1997).

The  most  significant  computational  change  resulting  from  adoption  of the
Statement   involves  replacing  primary  EPS  with  basic  EPS,  the  principal
difference  being that common stock  equivalents will not be considered in basic
EPS  calculations.   Since  under  current  accounting  standards  common  stock
equivalents are not factored into EPS calculations  for companies  reporting net
losses,  the Company  does not expect the new  pronouncement  to have a material
impact on reported EPS in the near term.

                                      - 9 -

<PAGE>

               GENERAL DATACOMM INDUSTRIES, INC. AND SUBSIDIARIES
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS


General Summary Discussion
--------------------------

The Company  reported losses for both the quarter and nine months ended June 30,
1997,  reflecting  the combined  impact of reduced  product  revenue  levels and
continued  heavy  investment  in its  Asynchronous  Transfer  Mode  ("ATM")  and
Advanced Network Access ("Access") product lines and technologies.  Year-to-date
total  revenues  are  down  $19.1  million,   or  10.9%,   from  one  year  ago.
Concurrently, research and development spending is up in accordance with plan by
$7.2 million,  or 21.8%, on a year-to-date  basis.  The combined impact of lower
revenues and higher  research and development  spending  account for most of the
increase  in reported  net losses for the three and nine  months  ended June 30,
1997, as compared to the corresponding periods one year ago.

Approximately  57%  of the  Company's  research  and  development  spending  was
attributable  to ATM  technology and products in the quarter ended June 30, 1997
(54% on a  year-to-date  basis).  ATM  revenues in fiscal 1997 have not achieved
earlier  anticipated  levels.  ATM  revenues  amounted to $8.3 million and $28.5
million for the three and nine months ended June 30,  1997,  as compared to $9.4
million  and  $33.2  million  in  the  corresponding  periods  of  fiscal  1996,
representing declines of 11.9% and 14.2%, respectively. The revenue shortfall is
discussed under the "Revenues" caption which follows.

The  Company's  overall  order input rate  exceeded  the  shipment  rate by $7.1
million  during the quarter,  resulting in an improved  order  backlog  position
entering the final fiscal quarter.

Total  revenues  for the third  fiscal  quarter  ended June 30,  1997 were $46.6
million,  down $10.0  million,  or 17.6%,  from the same  quarter  one year ago.
Year-to-date  revenues  for the nine  months  ended June 30,  1997 and 1996 were
$156.4 million and $175.5 million,  respectively,  down $19.1 million, or 10.9%.
The net loss for the quarter ended June 30, 1997 amounted to $13.8  million,  as
compared to a net loss of $7.8  million for the  corresponding  quarter one year
ago. The net loss for the nine months  ended June 30, 1997 and 1996  amounted to
$31.2 million and $12.3 million, respectively.

Regarding cash flows, operating activities consumed $5.4 million in cash for the
nine months ended June 30, 1997. After investing and financing activities,  cash
balances  were  reduced by $23.9  million for the same period to $2.4 million at
June 30, 1997, as compared to $26.3 million at September 30, 1996.


To help  support  future  cash  requirements,  the  Corporation  has in place an
amended $25.0 million (maximum value) revolving credit facility,  of which $22.4
million was available for  borrowings and letters of credit at June 30, 1997. No
borrowings  were  outstanding  on this credit  facility at June 30, 1997.  There
were,  however,  $780,000  of letters of credit  outstanding  at June 30,  1997.
Certain  assets of the  Corporation,  including  most  accounts  receivable  and
inventories, are pledged as collateral. The amount of borrowing is predicated on
satisfying  a  borrowing  base  formula  related to levels of  certain  accounts
receivable and  inventories,  which may limit available  borrowings to less than
$25.0 million.  The borrowing base under the formula tends to decline at interim
points  of a  quarter  (i.e.,  the  borrowing  base  dropped  to a low  point of
approximately $16.2 million in the quarter ended June 30, 1997).
 
                                    - 10 -
<PAGE>


General Summary Discussion - continued
--------------------------------------

The recently  amended  agreement  requires  conformity  with  various  financial
covenants  including,  among  others,  restricted  net  loss  performance.   The
amendment  also  increases the borrowing  rate by 1% and requires the Company to
raise at least $10.0  million from  proceeds of an equity  offering by September
30,  1997,  and an  additional  $10.0  million  before  January 1, 1998 on terms
satisfactory to BNY Financial Corporation.

While no borrowings were  outstanding at June 30, 1997, the Company did commence
utilizing  the  credit  facility   subsequent  to  June  30,  1997.   Borrowings
outstanding on the credit  facility  amounted to $7.3 million at August 7, 1997.
Company  management  recognizes a need to raise  additional  capital in the near
term to support cash  requirements  in fiscal 1998. As a result,  it is actively
pursuing alternative sources of funding,  such as the sale of equity securities,
debentures, and/or assets.

Management  also  recognizes  the need to  improve  operational  performance  in
anticipation  that revenue  growth  opportunities  will take time to develop.  A
managed  cost  reduction  effort  has been  implemented  with the  objective  of
reducing the  Corporation's  breakeven point. It is important to note,  however,
that significant revenue growth will also be required to achieve  profitability.
The cost  reduction  efforts  include  restrictions  on hiring and reductions in
discretionary  and capital  spending.  Reallocation  of resources to prioritized
projects is also under review to maximize the productivity of the  Corporation's
existing workforce.

The  Company  has  continued  to invest  heavily  in  research  and  development
activities  based on the  belief  that its ATM and  Access  products  and  their
related  technologies  have  the  potential  to  deliver   substantially  higher
revenues, and ultimately, shareholder value, on a longer term basis.

Results of Operations
---------------------

The following table sets forth selected consolidated  financial data stated as a
percentage of total revenues (unaudited):

                                       Three months ended      Nine months ended
                                            June 30,               June 30,    
                                       1997          1996      1997        1996
                                       ------------------      ----------------
Revenues:
   Net product sales                  75.7%        80.1%     79.0%       80.3%
   Service revenue                    21.6         16.9      18.5        16.6
   Leasing revenue                     2.7          3.0       2.5         3.1
                                       ----         ----      ----        ----
                                      100.0        100.0     100.0      100.0
Costs and expenses:
   Costs of revenues                   52.3         52.0      51.3       50.2
   Amortization of capitalized
     software development costs         6.4          5.3       5.8        4.9
   Selling, general and administrative 46.2         39.5      41.3       37.3
   Research and product development    22.7         15.4      19.8       13.8
                                       ----         ----      ----       ----
Operating loss                        (27.6)       (12.2)    (18.2)      (6.2)
                                       ----         ----      ----       ----
Net (loss)                            (29.7)%      (13.7)%   (20.0)%     (7.0)%
                                       ====         ====      ====       ====

                                     - 11 -

<PAGE>

Results of Operations - continued
---------------------------------
Percentages   for  the  quarter   ended  June  30,  1997  are  affected  by  the
lower-than-expected  product  revenue  base.  Noteworthy  observations  from the
year-to-date  numbers  include:  service  revenues have  remained  level despite
decreased  product  revenues  and as a result  comprise  18.5% of total  revenue
(versus 16.6% in fiscal 1996); fiscal 1997 total operating  expenses,  including
research and development,  amount to 61.1% of revenue,  as compared to 51.1% for
the nine months ended June 30, 1996;  research and product  development  related
expenses when combined with capitalized software  amortization amounted to 25.6%
and 18.7% of revenue for the  nine-month  periods  ended June 30, 1997 and 1996,
respectively,  an  increase  of  6.8%.  This  increase  reflects  the  Company's
continued significant investment in its ATM and Access product development.

Revenues
--------
 
                             Three Months Ended             Nine Months Ended
                                 June 30,                        June 30,      
                             ------------------             ------------------
                             1997          1996             1997          1996
                             ----          ----             ----          ----

         Total Revenues      $46,586     $56,569          $156,400     $175,538
         Percent Change      (17.6)%                        (10.9)%


Quarter:   The  $10.0  million,   or  17.6%,   revenue  decline  is  principally
attributable to product  revenues with both domestic and  international  markets
contributing  to  the  decline.   From  a  product  line  perspective,   Access,
Internetworking,  and ATM revenues were down $5.8 million (26.1%),  $3.4 million
(27.5%)  and  $1.1  million  (11.9%),  respectively.   Access  products  are  in
transition  as older  technologies  are in decline  while newer  products are in
acceptance  cycles.  Internetworking  products  were  affected by a $4.0 million
international  order where the schedule for  shipment  slipped to the  following
quarter.  The Corporation  attributes the  lower-than-expected  level of its ATM
business to longer sales cycle times required as a result of product  complexity
and new  technologies  involved in ATM systems.  Individual  ATM orders are also
often  larger in size than  orders  for other  products,  and the timing of such
orders  and  shipments  can  generate  large  quarter-to-quarter   fluctuations.
Separately,   the  Company's  service  operations  achieved  revenue  growth  of
$505,000, or 5.3%, over the same quarter one year ago. International  operations
accounted for all of the Service  operation's  revenue  growth.  Geographically,
international  revenues  accounted for 51% of total  consolidated  revenues,  as
compared to 50% in the corresponding quarter of the previous fiscal year.

Year-to-Date: The year-to-date total revenue decline of $19.1 million, or 10.9%,
is  attributable  to a $17.4  million  reduction  in product  revenue and a $1.6
million reduction in leasing revenues. Access, Internetworking,  and ATM product
revenues were down $9.2 million (14.3%),  $4.0 million (10.0%), and $4.7 million
(14.2%) respectively,  partially offset with increased licensing revenues of the
Company's  V.34  technology.  Such licensing  revenues  amounted to $3.9 million
through the nine months ended June 30,  1997,  an increase of $1.2  million,  or
43.9% over the prior year. The  explanations  for the product  revenue  declines
discussed above for the quarter also apply to the year-to-date numbers.  Service
revenue is relatively  unchanged  from the prior year,  with a 10.3% increase in
international  service business  offsetting a 6.7% decline in domestic service
business. The leasing revenue decline
                                     - 12 -

<PAGE>

Revenues - continued
--------------------
resulted from an unusually high level of revenue in the prior year, attributable
to lease renewals and sale of off-lease inventory. Geographically, international
revenues accounted for 49% of total consolidated  revenues,  up from 47% for the
same nine-month period one year ago.

Cost of Revenue and Gross Margin
--------------------------------

                                      Three Months Ended      Nine Months Ended
                                            June 30,               June 30,
                                      ------------------      -----------------
                                      1997         1996       1997        1996
                                      ----         ----       ----        ----
Gross margin, before capitalized
 software amortization                $22,222     $27,151     $76,086   $87,447
Percent of revenue                      47.7%       48.0%       48.7%     49.8%

Capitalized software amortization     $3,000      $3,000      $9,000     $8,600
Percent of revenue                       6.4%       5.3%         5.8%      4.9%

-------------------------------------------------------------------------------
Gross margin, after capitalized
 software amortization                $19,222     $24,151     $67,086   $78,847
Percent of revenue                      41.3%       42.7%       42.9%     44.9%


Quarter:  Gross margin as a percent of revenues  (excluding the  amortization of
capitalized  software development costs) was down 0.3 percentage points from the
same quarter one year ago, representing the net impact of: (1) the absorption of
fixed  production  costs over a reduced  revenue  base,  partially  offset  with
improved  margins  realized  on  product  sales;  (2)  service  margins  up  3.0
percentage   points  reflecting  the  impact  of  revenue  growth  and  recently
implemented cost containment  measures;  and (3) leasing margin deterioration of
1.6  percentage  points due to an unusually  high revenue level  achieved in the
prior fiscal year.

Year-to-Date:   Year-to-date   gross  margins  (excluding  the  amortization  of
capitalized  software  development  costs)  were down 1.1 points  from the prior
year, reflecting the combined impact of a minor reduction in margins realized on
product sold, the absorption of fixed  production  costs over a reduced  revenue
base, and reduced  service margins  partially  offset with an increased level of
high-margin  V.34  licensing  revenue.  The reduced  service  margins  (down 1.6
points) are attributable to the increase in international service business which
relies more heavily on the use of outside service  contracts which produce lower
margins.

Separately,  amortization of capitalized  software  development cost amounted to
$3.0 million in the quarters  ended June 30, 1997 and 1996, and $9.0 million and
$8.6  million  in  the  nine-month   periods  ended  June  30,  1997  and  1996,
respectively.

                                     - 13 -
<PAGE>


Selling, General and Administrative Expenses
--------------------------------------------

                                    Three Months Ended        Nine Months Ended
                                         June 30,                  June 30,    
                                    ------------------        ----------------
                                     1997         1996        1997         1996
                                     ----         ----        ----         ----
        Selling, General and
          Administrative Expenses   $21,518     $22,308    $64,654      $65,395
        Percent Change               (3.5)%       -         (1.1)%          -
        As Percent of Revenue         46.2%       39.4%      41.3%        37.3%

Due to cost containment efforts,  selling,  general, and administrative expenses
were down from the prior year in both the three and nine  months  ended June 30,
1997.  The  reduction for this  quarter,  representing  the first quarter of our
recently  implemented cost containment program,  amounted to $790,000,  or 3.5%,
from the same quarter one year ago. However, reduced revenue levels for both the
quarter and nine months ended June 30, 1997  resulted in an  increased  level of
selling,  general, and administrative costs as compared to the prior fiscal year
when measured as a percent of revenue.

Research and Product Development Costs
--------------------------------------
 
                                      Three Months Ended     Nine Months Ended
                                           June 30,               June 30,    
                                      ------------------     -----------------
                                       1997         1996     1997         1996
                                       ----         ----     ----         ----

         Gross Expenditures         $13,582       $11,738   $40,004    $32,844
         Percent Change               15.7%          -        21.8%         -
         As Percent of Revenue        29.2%        20.7%      25.6%      18.7%
         ---------------------------------------------------------------------  
         Costs capitalized          $3,000       $ 3,000    $ 9,107    $ 8,586
         As Percent Gross Spend      22.1%         25.6%      22.8%      26.1%
          ____________________________________________________________________
 
         Net R&D Expense            $10,582      $8,738     $30,897    $24,258
         Percent Change               21.1%         -         27.4%        -   
         As Percent of Revenue        22.7%       15.4%       19.8%      13.8%

         ---------------------------------------------------------------------

Quarter:  The  Company  continues  to invest  heavily in  research  and  product
development.  Gross research and product development spending,  before deduction
for capitalized  software  development costs,  increased to $13.6 million in the
third  quarter of fiscal 1997,  up $1.8 million or 15.7% from the $11.7  million
spending level in the corresponding quarter one year ago. This spending increase
is attributable to increased  headcount (up 35 persons),  related support costs,
and an increased utilization of outsourced product development services. Most of
the increase is associated with an ATM product development

                                     - 14 -

<PAGE>

Research and Product Development Costs - continued
--------------------------------------------------

activity, including development of our Strobos ATM product line. The combination
of a spending  increase and a reduced  revenue  base caused  gross  research and
development  spending to  increase to 29.2% of revenue,  as compared to 20.7% in
the same quarter one year ago.  Capitalized software development costs were $3.0
million in both of the quarters ended June 30, 1997 and 1996.

Year-to-Date:  Year-to-date  research and development  spending  follows similar
trends,  with gross  spending  for the nine  months  ended June 30, 1997 up $7.2
million,  or 21.8%, from the corresponding  period of fiscal 1996. The causes of
the spending  increase are consistent  with those discussed  above.  Capitalized
software  development  costs for the nine  months  ended June 30, 1997 were $9.1
million as compared to $8.6 million for the corresponding period of fiscal 1996.

The complexity of the ATM technology has and will continue to demand significant
research and product  development  investment.  To retain an  effective  pool of
available  engineering talent, the Corporation operates research and development
facilities  in  four   locations   including  the  United  States   (Middlebury,
Connecticut and Boston, Massachusetts), Canada, and the United Kingdom.

Other Income and Expense
------------------------

Please reference Note 7 on page 9 for a detailed  discussion of other income and
expense.

Income Tax Provisions
---------------------

Tax provisions  recorded by the Corporation,  principally for foreign income and
domestic  state taxes,  amounted to $100,000 and $300,000 in the quarters  ended
June 30, 1997 and 1996,  respectively.  Year-to-date tax provisions  amounted to
$300,000 and $900,000  for fiscal 1997 and 1996,  respectively.  As noted in the
Corporation's  Form 10-K  filed  for the year  ended  September  30,  1996,  the
Corporation has significant federal net operating loss carryforwards  available.
However,   based  on  the  Corporation's  past  financial  performance  and  the
uncertainty of ultimate realization of such carryforwards, no deferred tax asset
(or  related  deferred  tax  benefit)  has been  recorded  in the  Corporation's
financial statements.

Foreign Currency Risk
---------------------

Foreign currency fluctuations did not have a material impact on trends reflected
in the Corporation's  financial  statements.  No individual  foreign  subsidiary
operation represents a material percentage of consolidated revenue or net worth.
However, if international  subsidiary operations (i.e., Canada, Germany, France,
and Mexico)  experience  strong revenue growth in the future,  the likelihood of
foreign currency  fluctuations  impacting trends reflected in the  Corporation's
financial statements could increase,  especially if the U.S. dollar continues to
strengthen against the respective currencies. Separately, subsidiaries have some
U.S. dollar denominated liabilities. The impact of foreign currency fluctuations
on such amounts are recorded as a component of "Other Income and Expense" in the
Corporation's statements of operations.  Please reference Notes 6 and 7 on pages
8 and 9, respectively, for further discussion.


                                     - 15 -


LIQUIDITY AND CAPITAL RESOURCES
------------------------------

The Corporation's cash and cash equivalents amounted to $2.4 million at June 30,
1997 as compared to $26.3 million at September 30, 1996. To help support  future
cash  requirements,  the  Corporation  has in place  an  amended  $25.0  million
(maximum value) revolving credit facility,  of which $22.4 million was available
for  borrowings  and  letters of credit at June 30,  1997.  No  borrowings  were
outstanding  on this credit  facility  at June 30,  1997.  There were,  however,
$780,000 of letters of credit  outstanding  at June 30, 1997.  Certain assets of
the Corporation, including most accounts receivable and inventories, are pledged
as  collateral.  The amount of borrowing is predicated on satisfying a borrowing
base formula related to levels of certain  accounts  receivable and inventories,
which may limit available  borrowings to less than $25.0 million.  The borrowing
base under the formula  tends to decline at interim  points of a quarter  (i.e.,
the borrowing base dropped to a low point of approximately  $16.2 million in the
quarter ended June 30, 1997).

The recently  amended  agreement  requires  conformity  with  various  financial
covenants  including,  among  others,  restricted  net  loss  performance.   The
amendment  also  increases the borrowing  rate by 1% and requires the Company to
raise at least $10.0  million from  proceeds of an equity  offering by September
30,  1997 and an  additional  $10.0  million  before  January  1,  1998 on terms
satisfactory to BNY Financial Corporation.

While no borrowings were  outstanding at June 30, 1997, the Company did commence
utilizing  the  credit  facility   subsequent  to  June  30,  1997.   Borrowings
outstanding on the credit  facility  amounted to $7.3 million at August 7, 1997.
Company  management  recognizes a need to raise  additional  capital in the near
term to support cash  requirements  in fiscal 1998. As a result,  it is actively
pursuing  alternative  sources of funding such as the sale of equity securities,
debentures,  and/or  assets.  Also,  please  reference  "Certain  Risk  Factors"
discussed on page 17.
 
Other bank debt was relatively  unchanged  from the prior year-end  amounting to
$29.1  million  and $29.3  million  at June 30,  1997 and  September  30,  1996,
respectively.

Operating
---------

During  the  nine  months  ended  June 30,  1997,  the  Corporation's  operating
activities  generated  negative  cash flow of $5.4  million,  as  compared  to a
positive  cash flow of $12.4 million for the same period one year ago. The $17.8
million  variance is principally  comprised of a larger reported net loss ($18.9
million),  fluctuations  in the level of accounts  payable and accrued  expenses
($8.1 million),  a decline in accounts receivable ($6.1 million source of funds)
attributable  to reduced  sales volume,  and an improved days sales  outstanding
position.  The $8.1 million variance in accounts payable and accrued expenses is
primarily  attributable to trade accounts  payable,  which were at an abnormally
low level as of September  30, 1995.  (Inventories  showed  strong growth in the
first half of fiscal 1995 and were  subsequently  reduced by $8.8 million in the
six months ended  September  30, 1995.  The inventory  reduction  resulted in an
unusually low level of cash expenditure for inventory  purchases in early fiscal
1996).

Non-debt  working  capital  excluding cash and cash  equivalents  decreased $8.2
million  to $39.7  million  at June 30,  1997 as  compared  to $47.9  million at
September  30, 1996.  The reduction is  principally  comprised of a $9.6 million
decrease in accounts receivable attributable to a reduced level of product

                                     - 16 -

<PAGE>

shipments in the quarter ended June 30, 1997, and improved collection activities
(days sales outstanding were reduced to 59 days at June 30, 1997 from 61 days at
September 30, 1996).

Investing
---------

Net investments in property, plant, and equipment for the nine months ended June
30,  1997  amounted  to $8.7  million,  as  compared  to $10.7  million  for the
corresponding  period of fiscal 1996. The Company  continues to closely  monitor
all requests for capital  spending in an effort to preserve  cash and limit such
investment to instances which appear to offer the greatest return on investment.
Separately,  investments  in capitalized  software  amounted to $9.1 million and
$8.6  million  for the nine months  ended June 30, 1997 and 1996,  respectively.
Total investments amounted to $17.8 million and $19.3 million in the nine months
ended June 30, 1997 and 1996, respectively. Cash investments in fiscal 1996 were
partially offset with $1.0 million in proceeds from the sale of real estate.

Financing
---------

Financing  activities  during the nine-month period ended June 30, 1997 required
the use of  $463,000  in cash  representing  the net effect of  $246,000 in debt
reduction,  payment of $1,350,000 in preferred stock  dividends,  and receipt of
$1.1  million in cash  proceeds  from the sale of stock  through  the  Company's
Employee Stock Purchase Plan and exercise of stock options.

Please reference the discussion  under  "Liquidity and Capital  Resources" above
and Note 5 on page 7 regarding on-hand cash balances,  a $25.0 million revolving
credit  facility  available to the  Company,  the terms  thereof and  amendments
thereto,   and  forward-looking   projections  which  display  a  need  for  the
Corporation to raise additional capital in the near term to effectively  support
its cash requirements.  The Corporation  considers its ability to offer for sale
its common  stock,  preferred  stock,  warrants,  and/or  other assets as viable
alternative  sources  of  financing,  some form of which  management  expects to
execute  within the next three  months.  Execution of such  action(s),  however,
cannot be assured.

 
CERTAIN RISK FACTORS
--------------------

Continuing  Losses:  The  Company has  sustained  net losses for the past eleven
quarters ending June 30, 1997.  There can be no assurance as to when the Company
will achieve net income.

Credit  Availability:  As noted above,  the Company's  revolving credit facility
agreement  includes  provisions  whereby covenant  compliance  including,  among
others,  restricted net loss  performance  and  obligations to raise  additional
capital, is required. If the Company fails to comply with the required covenants
and a waiver or amendment is not  obtained,  the Company may be unable to borrow
funds under such  agreement.  In such case the Company  will be required to seek
other  financing  to fund its  operations,  and  there can be no  assurance  the
Company will be able to obtain such  financing  or if obtained,  on terms deemed
favorable by the Company.  Furthermore, in the event the Company does default on
its BNY Financial Corporation obligation,  such default may result in payment of
other outstanding indebtedness to be accelerated.

                                     - 17 -

<PAGE>

Risk Factors in Future Operating Results - continued
-----------------------------------------------------

Volatility of Stock Price:  The trading price of the Common Stock has fluctuated
widely in response to quarter-to-quarter operating results, industry conditions,
awards of orders to the  Company  or its  competitors,  new  product  or product
development  announcements  by the  Company or its  competitors,  and changes in
earnings  estimates  by  analysts.  Any  shortfall  in revenue or earnings  from
expected  levels could have an immediate and  significant  adverse effect on the
trading price of the Company's Common Stock in any given period.

SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995

Portions of the  foregoing  discussion  include  descriptions  of the  Company's
expectations regarding future trends affecting its business. The forward-looking
statements  made  in  this  document,  as  well  as  all  other  forward-looking
statements  or  information  provided by the Company or its  employees,  whether
written or oral,  are made in reliance  upon the safe harbor  provisions  of the
Private Securities Litigation Reform Act of 1995. Forward-looking statements and
future  results  are  subject  to, and should be  considered  in light of risks,
uncertainties,  and other factors which may affect future results including, but
not limited to: competition, rapid changing technology, regulatory requirements,
and uncertainties of international trade.


                                     - 18 -


<PAGE>

                        GENERAL DATACOMM INDUSTRIES, INC.
                                AND SUBSIDIARIES




Part II.  Other Information


  Item 6.   Exhibits and Reports on Form 8-K

            (a) Index of Exhibits

                4.1 Indenture dated May 1, 1997 covering presently unissued 9%
                     Convertible Subordinated Debentures due 2006.

             
                11. Calculation of Earnings Per Share for the three- and 
                     nine-month periods ended June 30, 1997 and 1996.


             (b) Reports on Form 8-K
             
                  No reports on Form 8-K were filed during the quarter for which
                  this report is filed.


                                     - 19 -



<PAGE>


                                   SIGNATURES

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

                           GENERAL DATACOMM INDUSTRIES, INC.
                                    (Registrant)

                           /S/ WILLIAM S. LAWRENCE
                           --------------------------
                           William S. Lawrence
                           Senior Vice President and Principal Financial Officer


Dated:  August 14, 1997


                                     - 20 -