UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB

(Mark One)

[X]  Quarterly report under Section 13 or 15(d) of the Securities Exchange Act
     of 1934

        For the quarterly period ended June 30, 2005
                                       -------------

[ ]  Transition report under Section 13 or 15(d) of the Exchange Act

        For the transition period from __________ to __________

        Commission file number 1-8086
                               ------

                        General DataComm Industries, Inc.
--------------------------------------------------------------------------------
        (Exact Name of Small Business Issuer as Specified in its Charter)


           Delaware                                            06-0853856
--------------------------------------------------------------------------------
(State of Other Jurisdiction of                             I.R.S. employer
 Incorporation or Organization)                            Identification No.)


                      6 Rubber Avenue, Naugatuck, CT 06770
--------------------------------------------------------------------------------
                    (Address of Principal Executive Officers)


                                  203-729-0271
--------------------------------------------------------------------------------
                (Issuer's Telephone Number, Including Area Code)


--------------------------------------------------------------------------------
         (Former Name, Former Address and Former Fiscal Year, if Changed
                               Since Last Report)

         Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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 [ ]

                     APPLICABLE ONLY TO ISSUERS INVOLVED IN
                        BANKRUPTCY PROCEEDINGS DURING THE
                              PRECEDING FIVE YEARS

         Check whether the registrant filed all documents and reports required
to be filed by Section 12,13 or 15(d) of the Exchange Act after the distribution
of securities under a plan confirmed by a court.

                               Yes [X]     No [ ]

                       APPLICABLE ONLY TO CORPORATE ISSUER

         State the number of shares outstanding of each of the issuer's classes
of common equity, as of July 30, 2005:

                        3,329,372 shares of Common Stock
                          664,978 shares of Class B Stock


    Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]
<PAGE>

                        GENERAL DATACOMM INDUSTRIES, INC.

                    INDEX TO QUARTERLY REPORT ON FORM 10-QSB


<TABLE>
<CAPTION>
PART I     FINANCIAL INFORMATION                                                     Page
------                                                                               ----
<S>        <C>                                                                        <C>
Item 1.    Financial Statements (unaudited):
                Condensed Consolidated Balance Sheets as of
                     June 30, 2005 and September 30, 2004..............................3
                Condensed Consolidated Statements of Operations for
                     the Three Months and Nine Months Ended June 30, 2005 and 2004.....4
                Condensed Consolidated Statements of Cash Flows for
                     the Three Months and Nine Months Ended June 30, 2005 and 2004 ....5
                Notes to the Condensed Consolidated Financial Statements...............6

Item 2.    Management's Discussion and Analysis or Plan of Operation..................14

Item 3.    Controls and Procedures ...................................................31

PART II    OTHER INFORMATION
-------

Item 1.    Legal Proceedings..........................................................32

Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds................32

Item 3.    Defaults Upon Senior Securities............................................32

Item 4.    Submission of Matters of a Vote of Security Holders........................32

Item 5.    Other Information..........................................................32

Item 6.    Exhibits...................................................................32
</TABLE>

                                       2
<PAGE>

                          PART I. FINANCIAL INFORMATION

                          ITEM 1. FINANCIAL STATEMENTS

                        General DataComm Industries, Inc.
                      Condensed Consolidated Balance Sheets
                          (in thousands except shares)

<TABLE>
<CAPTION>
                                                                                             June 30,      September 30,
                                                                                               2005            2004*
                                                                                           (Unaudited)
-----------------------------------------------------------------------------------------------------------------------
<S>                                                                                        <C>             <C>
Assets:
Current assets:
     Cash and cash equivalents                                                             $      1,035    $        586
     Accounts receivable, less allowance for doubtful accounts of
      $698 at June 30, 2005 and $586 at September 30, 2004                                        3,556           2,136
     Inventories                                                                                  3,398           4,110
     Other current assets                                                                           461             227
-----------------------------------------------------------------------------------------------------------------------
Total current assets                                                                              8,450           7,059
-----------------------------------------------------------------------------------------------------------------------
Property, plant and equipment, net                                                                4,296           4,205
=======================================================================================================================
Total Assets                                                                               $     12,746    $     11,264
=======================================================================================================================

Liabilities and Stockholders' Deficit:
Current liabilities:
     Current portion of long-term debt ($3,808 in 2005 and 2004 owed to related parties)   $     32,019    $     37,281
     Accounts payable                                                                             1,770           1,662
     Accrued payroll and payroll-related costs                                                      819             271
     Accrued interest ($160 in 2005 and $15 in 2004 owed to related parties)                      4,736           2,777
     Other current liabilities ($685 in 2005 and $280 in 2004 owed to related                     6,167           6,006
-----------------------------------------------------------------------------------------------------------------------
Total current liabilities                                                                        45,511          47,997
-----------------------------------------------------------------------------------------------------------------------
Long-term debt, less current portion                                                                 --              --
Other liabilities                                                                                 1,000           1,301
=======================================================================================================================
Total Liabilities                                                                                46,511          49,298
=======================================================================================================================

Commitments and contingencies                                                                        --              --

Stockholders' deficit:
   Preferred stock, par value $1.00 per share, 2,000,000 shares
      authorized, none outstanding                                                                   --              --
   9% Preferred stock, par value $1.00 per share, 800,000 shares
      authorized, 787,900  shares issued and  outstanding; $28.6
      million liquidation preference at June 30, 2005                                               788             788
   Class B common stock, par value $.01 per share, 5,000,000 shares
      authorized; 664,978 shares issued and outstanding                                               7               7
   Common stock, par value $.01 per share, 25,000,000 shares authorized;
      3,329,372 shares issued                                                                        33              33
   Capital in excess of par value                                                               198,433         198,433
   Accumulated deficit                                                                         (232,881)       (237,150)
   Common stock held in treasury, at cost; 1,961 shares                                            (145)           (145)
=======================================================================================================================
Total Stockholders' Deficit                                                                     (33,765)        (38,034)
=======================================================================================================================
Total Liabilities and Stockholders' Deficit                                                $     12,746    $     11,264
=======================================================================================================================
</TABLE>

* Derived from the Company's audited consolidated balance sheet at September 30,
2004.

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

                                       3
<PAGE>

                        General DataComm Industries, Inc.
           Condensed Consolidated Statements of Operations (Unaudited)
                        (in thousands except share data)


<TABLE>
<CAPTION>
                                                                  Three Months Ended              Nine Months Ended
                                                                       June 30,                        June 30,
                                                             ----------------------------    ----------------------------

                                                                 2005            2004            2005            2004
-------------------------------------------------------------------------------------------------------------------------
<S>                                                          <C>             <C>             <C>             <C>
Revenues                                                     $      3,607    $      3,605    $     10,834    $     12,800
Cost of revenues                                                    1,635           1,544           4,510           5,419
-------------------------------------------------------------------------------------------------------------------------
Gross margin                                                        1,972           2,061           6,324           7,381

Operating expenses:

  Selling, general and administrative                               1,323           1,156           3,658           4,758
  Research and product development                                    553             670           1,633           2,124
-------------------------------------------------------------------------------------------------------------------------
                                                                    1,876           1,826           5,291           6,882

Operating  income                                                      96             235           1,033             499

Other income (expense):
  Interest expense                                                   (845)           (869)         (2,586)         (2,659)
  Gain on sale of minority interest                                    --              --             300              --
  Recoveries on note receivable                                     1,989              --           4,737              --
  Other, net                                                           61             (38)            157              99
-------------------------------------------------------------------------------------------------------------------------
                                                                    1,205            (907)          2,608          (2,560)

Income (loss) before reorganization items and income taxes          1,301            (672)          3,641          (2,061)

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

Reorganization items:
              Claims reductions                                        12             788             258           2,118
-------------------------------------------------------------------------------------------------------------------------

Income before income taxes                                          1,313             116           3,899              57

Income tax provision (benefit)                                        (12)              6            (370)             17
-------------------------------------------------------------------------------------------------------------------------

Net income                                                          1,325             110           4,269              40

Less:  dividends applicable to preferred stock                       (443)           (443)         (1,329)         (1,337)
-------------------------------------------------------------------------------------------------------------------------

Net income (loss) applicable to common and Class B stock     $        882    $       (333)   $      2,940    $     (1,297)
=========================================================================================================================

Earnings (loss) per share:

    Basic - common stock                                     $       0.22    $      (0.08)   $       0.75    $      (0.33)
    Basic - Class B stock                                    $       0.20    $      (0.08)   $       0.68    $      (0.33)
    Diluted                                                  $       0.15    $      (0.08)   $       0.51    $      (0.33)

=========================================================================================================================

Weighted average number of common and Class B
      shares outstanding:
      Basic                                                     3,994,273       3,968,850       3,981,995       3,966,040
      Diluted                                                   6,225,197       3,968,850       6,015,917       3,966,040

=========================================================================================================================
</TABLE>

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

                                       4
<PAGE>

                        General DataComm Industries, Inc.
           Condensed Consolidated Statements of Cash Flows (Unaudited)
                                 (In thousands)


<TABLE>
<CAPTION>
                                                                   Three Months Ended              Nine Months Ended
                                                                        June 30,                        June 30,
                                                              ----------------------------    ----------------------------
                                                                  2005            2004            2005            2004
--------------------------------------------------------------------------------------------------------------------------
<S>                                                           <C>             <C>             <C>             <C>
Cash flows from operating activities:
Net income (loss)                                             $      1,325    $        110    $      4,269    $         40
Adjustments to reconcile net income (loss) to net cash
provided (used) by operating activities:
     Depreciation and amortization                                      70              49             190             143
     Gain on claim reductions                                          (12)           (788)           (258)         (2,118)
     Reduction in note receivable reserve                           (1,989)             --          (4,737)             --
     Reduction in reserve for foreign income taxes                      --              --            (369)             --
     Increase in inventory obsolescence reserve                        164              --             164              --
     Changes in:
        Accounts receivable                                           (811)            942            (250)            661
        Inventories                                                    217             478           1,048             642
        Accounts payable                                              (152)           (412)            (85)           (303)
        Accrued payroll and payroll-related costs                       90            (156)            190            (516)
        Other net current liabilities                                1,287            (420)          2,162            (419)
        Other net long-term assets                                      (1)            605            (158)          1,533
--------------------------------------------------------------------------------------------------------------------------

Net cash provided (used) by operating activities                       188             408           2,166            (337)
==========================================================================================================================

Cash flows from investing activities:
  Acquisition of property, plant and equipment, net                     (7)             (5)            (19)            (34)
  Note receivable collections (including $835 of cash in
    company acquired)                                                3,583              --           3,594             111
--------------------------------------------------------------------------------------------------------------------------

Net cash provided (used) by investing activities                     3,576              (5)          3,575              77
==========================================================================================================================

Cash flows from financing activities:
  Proceeds from notes payable to related parties                        --             250              --           1,350
  Proceeds from notes payable                                           --              --             214              --
  Principal payments on notes payable                                 (101)                           (101)
  Principal payments on term obligation                             (3,561)           (750)         (5,405)         (2,627)
--------------------------------------------------------------------------------------------------------------------------

Net cash used by financing activities                               (3,662)           (500)         (5,292)         (1,277)
==========================================================================================================================

Net increase (decrease) in cash and cash equivalents                   102             (97)            449          (1,537)

Cash and cash equivalents, beginning of period                         933             998             586           2,438
--------------------------------------------------------------------------------------------------------------------------

Cash and cash equivalents, end of period                      $      1,035    $        901    $      1,035    $        901
==========================================================================================================================

Supplemental disclosures of cash flow information:
  Cash paid during the period for:
     Interest                                                 $        173    $        259    $        597    $        760
     Income and franchise taxes                               $          4    $          8    $         49    $         25
     Reorganization items                                     $          5    $         45    $        235    $        458
  The assets acquired of Ahead Communications Systems, Inc.
  net of liabilities assumed were $1,989
==========================================================================================================================
</TABLE>

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

                                       5
<PAGE>

                        GENERAL DATACOMM INDUSTRIES, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)


1.   Basis of Presentation and Liquidity

     The accompanying unaudited interim condensed consolidated financial
statements of General DataComm Industries, Inc. (the "Company" or "GDC") have
been prepared on a going concern basis, in accordance with generally accepted
accounting principles in the United States for interim financial information,
the instructions to Form 10-QSB and Article 10 of Regulation S-X. Accordingly,
they do not include all of the information and footnotes required by generally
accepted accounting principles for year end financial statements. Furthermore,
as discussed in Note 2 below, certain estimates were used to value the assets
acquired and liabilities assumed in an acquisition on June 30, 2005 and such
estimates are subject to change when additional information concerning
valuations is completed. In the opinion of management and subject to the
valuation changes that may be required, these statements include all
adjustments, consisting of normal and recurring adjustments, considered
necessary for a fair presentation of the results for the periods presented. The
results of operations for the periods presented are not necessarily indicative
of results which may be achieved for the entire fiscal year ending September 30,
2005 or thereafter. The unaudited interim condensed consolidated financial
statements should be read in conjunction with the financial statements and notes
thereto contained in the Company's annual report on Form 10-K for the fiscal
year ended September 30, 2004 as filed with the Securities and Exchange
Commission.

Background

As a result of continuing losses and an inability to meet debt obligations on
November 2, 2001, General DataComm Industries, Inc. and its domestic
subsidiaries ("the Debtors") filed a voluntary petition for relief under Chapter
11 of the Bankruptcy Code in the United States Bankruptcy Court for the District
of Delaware.

Thereafter, the Company consolidated its remaining operations into its owned
facility in Naugatuck, Connecticut and downsized its staff and operating assets
to more properly reflect its reduced operating requirements.

The Company emerged from Chapter 11 on September 15, 2003 pursuant to a
court-approved plan of reorganization. Under this plan, the Company intends to
pay all creditors 100% of their allowed claims based upon a five year business
plan. However, the Company cannot assure its investors that it will be able to
obtain new customers or to generate the increase in revenues required to meet
its business plan objectives. The Company has generally experienced declining
revenues since emerging from Chapter 11.

The Company has no current ability to borrow additional funds. It must,
therefore, fund operations from cash balances and cash generated from operating
activities. The Company has significant short-term obligations including payment
of bankruptcy-related and other professional fees, delinquent property taxes and
monthly payments of principal and interest (currently such monthly principal and
interest totals approximately $290,000) under its senior loan agreement. In
fiscal 2004 the Company borrowed $1.6 million from related parties in order to
meet its current payment obligations (see Note 5). Furthermore, the Company has
significant outstanding future obligations as shown in the accompanying
condensed consolidated balance sheet at June 30, 2005. In order to meet these
and other future payments the Company must achieve revenue growth while at the
same time limiting investments in inventories and capital assets.

                                       6
<PAGE>

The Company's failure to make required payments under its loan agreement would
constitute an event of default. In addition, the Company is required to maintain
a minimum level of EBITDA (earnings before interest, taxes, depreciation and
amortization) each quarter to avoid an event of default and was required to
obtain a waiver for the period ended September 30, 2004 in order to avoid an
event of default. The Company's quarterly operating results are subject to
fluctuation due to a number of factors resulting in more variability and less
predictability in the Company's quarter-to-quarter sales and operating results.
Such factors include (but are not limited to): dependence on a small number of
customers, short delivery times, dependence on subcontract manufacturers, low
order backlog, ability to timely develop new products and market acceptance of
new products. As mentioned above, the Company did not meet the EBITDA financial
covenant for the period ended September 30, 2004 and received a waiver for such
period. The Company's calculations for the subsequent periods ended December 31,
2004, March 31, 2005 and June 30, 2005 show that the Company was in compliance
with the financial covenant and management anticipates that the Company will
remain in compliance in the September 30, 2005 quarter and beyond. However,
there can be no assurance that the Company will be able to avoid an event of
default (either a payment failure or covenant violation) on the loan agreement
in the future. If there is such a default, the senior secured lenders may
accelerate payment of the outstanding debt ($8.5 million at June 30, 2005) and
exercise their security interests, which likely would require the Company to
again file for bankruptcy protection. An acceleration by the senior secured
lenders would also result in a default and acceleration by the debenture holders
($21.9 million of principal outstanding at June 30, 2005). Based on the covenant
violation that was waived for the quarter ended September 30, 2004 and the
uncertainty that the Company could comply with the EBITDA covenant or payment
obligations in future quarterly periods over the next year, the Company's
long-term debt has been classified as current liabilities in the accompanying
consolidated balance sheets at both June 30, 2005 and September 30, 2004.

At June 30, 2005, the Company had a stockholders' deficit of approximately $33.8
million. In addition, the Company's principal source of liquidity includes cash
and cash equivalents of approximately $1.0 million and it had a working capital
deficit of approximately $37.0 million. The large negative working capital
reflects the classification of all long-term secured debt as current
liabilities.

Because operating results can fluctuate significantly due to decreases in
customer demand or decreases in the acceptance of future products, the Company,
during fiscal 2004, was not, and may not be in the future be able to generate
positive cash flow from operations. Should the need arise, it may become
necessary to borrow additional funds or otherwise raise additional capital.
However, since the Company does not have any source of additional funds or
capital in place, any such requirement could have a material adverse effect on
the Company.

The potential liquidity and cash flow risks described above raise substantial
doubt about the Company's ability to continue as a going concern. The Company's
independent auditors have expressed uncertainty about the Company's ability to
continue as a going concern in their opinion on the Company's fiscal 2004
financial statements.

Management has responded to such risks as part of an ongoing strategy, by
restructuring the sales force, increasing factory shutdown time, containing
expenses, reducing employee salaries and wages and reducing the size of the
employee workforce. In addition, in fiscal 2004 the Company obtained $1.6
million from loans from related parties to be used primarily for replacement of
senior indebtedness being repaid with the proceeds (see Note 5). The Company
also is actively marketing for sale or lease its land and building and pursuing
other asset recoveries, the proceeds of which would be used to reduce senior
secured debt and related interest. On May 5, 2005, the Company received $2.7
million in recovery on a note receivable and used the proceeds to pay down
senior secured debt (see Note 2).

                                       7
<PAGE>

While the Company is aggressively pursuing opportunities and corrective actions,
there can be no assurance that the Company will be successful in its efforts to
generate sufficient cash from operations or obtain additional funding sources.
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern and do not include any
adjustments that may result from the outcome of these uncertainties.

2.   Acquisition of Ahead Communications Systems, Inc. ("ACS") and Recoveries on
     Note Receivable

In August 2001, the Company received a note in the amount of $17.0 million as
partial consideration for the sale of its Broadband Systems division and
retained a security interest in the underlying assets sold. Shortly thereafter,
the company, the purchaser (Ahead Communication Systems, Inc.) and the
purchaser's parent company in Austria (Ahead Communications systems AG), which
had guaranteed payment of the note, all filed for bankruptcy protection, the
purchaser ("ACS") defaulted on the note payment and disputes arose relating to
the division sale agreements. As a result, the Company established a valuation
reserve for a substantial portion of the note and as a result, recorded a
related loss in fiscal 2001. At September 30, 2004, the Company's prior fiscal
year end, the note was fully reserved so that any future recoveries would result
in recording a gain.

On May 5, 2005 the Company received a payment of $2,747,848 in partial
satisfaction of the note, as a result of the liquidation of the purchaser's
parent company in Austria. Such payment was used to reduce senior secured debt
as required under the Company's Plan of Reorganization, which was approved when
it emerged from Chapter 11 bankruptcy on September 15, 2003, and the loan
agreement entered into as part of the Plan of Reorganization. The Company
adjusted the note valuation reserve and recorded a gain for the amount of the
payment in the quarter ended March 31, 2005.

On May 19, 2005, the Company, ACS and the Official Committee of Unsecured
Creditors in the Ahead bankruptcy case filed with the Bankruptcy Court for the
District of Connecticut a jointly approved Chapter 11 Plan (the "Plan") which
was confirmed on June 15, 2005 by the Bankruptcy Court and which became
effective June 30, 2005. The Plan provided for creation of a fund in the amount
of $500,000 for distribution to the unsecured creditors of ACS. Under the Plan,
all remaining property, including cash (after payment of amounts due for
administration claims, priority tax claims, unsecured claims and priority
claims) was transferred to a newly organized Connecticut subsidiary of the
Company, also named Ahead Communications Systems, Inc. Under the Plan,
employment in the new subsidiary was offered to all employees of ACS and Mr.
Anton Kaeslin, President of ACS, became President, Chief Executive Officer and a
director of the new subsidiary. All employees of ACS accepted employment with
the new subsidiary which is operated at ACS's former office in Middlebury,
Connecticut.

The Company recorded a gain of $1,989,000 in the quarter ended June 30, 2005 to
reflect the acquisition of the ACS assets, certain liabilities and business
received in final settlement of the note, as described above, that ACS owed to
the Company. Such gain was determined based upon an estimate of the value of the
ACS net assets acquired and such valuation is still in progress and subject to
change. Any such change will result in a corresponding change in the amount of
the gain. Furthermore, the valuation amount has been allocated to the assets
acquired and certain liabilities assumed based on their respective fair values
at the acquisition date. Such allocations are subject to change when additional
information concerning asset and liability valuations are completed. The
preliminary allocations that are subject to change primarily consist of
inventories, property and equipment. Because the acquisition occurred on June
30, 2005, no results of operations are included in the Company's Consolidated
Statement of Operations for the period ended June 30, 2005.

                                       8
<PAGE>

The following table summarizes, on an unaudited pro forma basis, the results of
operations of the Company for the three and nine months ended June 30, 2005 and
2004 as though the acquisition of ACS had been completed as of October 1, 2003.

<TABLE>
<CAPTION>
                                                         Three Months Ended June 30,     Nine Months Ended June 30,
                                                              2005         2004              2005          2004
                                                           -----------------------        ------------------------
                                                                 (Unaudited)                     (Unaudited)
<S>                                                        <C>          <C>               <C>           <C>
Revenue                                                    $    4,952   $    5,656        $   16,044    $   18,465
------------------------------------------------------------------------------------------------------------------
Net Income (loss) applicable to common and Class B Stock          261         (827)            1,898        (2,416)
------------------------------------------------------------------------------------------------------------------
Earnings (loss) per share:
   Basic - Common Stock                                    $     0.07   $    (0.21)       $     0.48    $    (0.61)
   Basic - Class B Stock                                   $     0.06   $    (0.21)       $     0.46    $    (0.61)
   Diluted                                                 $     0 05   $    (0.21)       $     0.33    $    (0.61)
==================================================================================================================
</TABLE>


3.   Earnings (Loss) Per Share

     Basic earnings (loss) per share is computed by dividing net income
available to common stockholders by the weighted average number of common and
Class B shares outstanding during the period. Diluted earnings per share gives
effect to all potential dilutive common shares outstanding during the period. In
computing diluted earnings per share, the average price of the Company's common
stock for the period is used in determining the number of shares assumed to be
purchased from exercise of stock options. Dividends applicable to preferred
stock represent accumulating dividends that are not declared or accrued. The
following table sets forth the computation of basic and diluted earnings (loss)
applicable to common and Class B stock for the three and nine months ended June
30, 2005 and 2004 (in thousands, except shares and per share data):

Basic earnings (loss) per share:
<TABLE>
<CAPTION>

                                                                  Three Months Ended June 30,     Nine Months Ended June 30,
                                                                      2005            2004            2005            2004
                                                                 ----------------------------    ----------------------------

-----------------------------------------------------------------------------------------------------------------------------
<S>                                                              <C>             <C>             <C>             <C>
 Net income (loss)                                               $      1,325    $        110    $      4,269    $         40
    Less:  dividends applicable to preferred stock                       (443)           (443)         (1,329)         (1,337)
-----------------------------------------------------------------------------------------------------------------------------
Net income (loss) applicable to common and Class B stock         $        882    $       (333)   $      2,940    $     (1,297)
=============================================================================================================================

Weighted average number of common
and Class B shares outstanding:                                     3,994,273       3,968,850       3,981,995       3,966,040
-----------------------------------------------------------------------------------------------------------------------------

 Basic earnings (loss) per common share                          $       0.22    $       (.08)   $       0.75    $      (0.33)
 Basic earnings (loss) per Class B share                         $       0.20    $       (.08)   $       0.68    $      (0.33)
=============================================================================================================================
</TABLE>

Class B stock, under certain circumstances, has greater voting power in the
election of directors. However, common stock is entitled to cash dividends, if
and when paid, 11.11% higher per share than Class B stock.

                                       9
<PAGE>

Diluted earnings (loss) per share:

<TABLE>
<CAPTION>
                                                                  Three Months Ended June 30,     Nine Months Ended June 30,
                                                                      2005            2004            2005            2004
                                                                 ----------------------------    ----------------------------

-----------------------------------------------------------------------------------------------------------------------------
<S>                                                              <C>             <C>             <C>             <C>
 Net income (loss)                                               $      1,325    $        110    $      4,269    $         40
    Less:  dividends applicable to preferred stock                       (443)           (443)         (1,329)         (1,357)
    Plus:  convertible note interest                                       33              --             101              --
-----------------------------------------------------------------------------------------------------------------------------
Net income (loss) applicable to common and Class B stock         $        915    $       (333)   $      3,041    $     (1,297)
=============================================================================================================================

Weighted average number of common
and Class B shares outstanding:                                     6,225,197       3,968,850       6,015,917       3,966,040
-----------------------------------------------------------------------------------------------------------------------------

 Diluted earnings (loss) per common and Class B share:                   0.15    $      (0.08)   $       0.51    $      (0.33)
=============================================================================================================================
Number of  shares subject to option excluded
   from computation of diluted earnings per share because
   their effect is anti-dilutive                                       81,104         280,265          81,104         280,265
=============================================================================================================================
</TABLE>

The Company's computations of diluted earnings per share for the three and nine
months ended June 30, 2005 include the potential dilutive effect of 618,368 and
421,366 of stock options and warrants, respectively, and the potential dilutive
effect of the conversion of notes payable to related parties into 1,612,000
shares of common stock. The Company's computations of diluted earnings per share
for the three and nine months ended June 30, 2005 do not include the effect of
81,104 stock options and warrants, and the assumed conversion of preferred stock
into 144,000 shares of common stock because the effect would be anti-dilutive.
Contingent warrants granted to secured lenders which are issuable only in the
event of default or if certain payment terms are not met are excluded from the
computation of earnings per share because the contingency defined in the loan
agreement has not taken place (for further discussion of these items, see Notes
7, 9 and 12 in Item 8 of the Company's annual report on Form 10-K for the fiscal
year ended September 30, 2004 as filed with the Securities and Exchange
Commission and Note 5 below).

4.  Inventories

Inventories consist of (in thousands):

                                                    June 30,     September 30,
                                                      2005            2004
  ----------------------------------------------------------------------------
Raw materials                                    $         714   $       1,124
Work-in-process                                          1,588           1,323
Finished goods                                           1,096           1,663
------------------------------------------------------------------------------
                                                 $       3,398   $       4,110
==============================================================================

Inventories are stated at the lower of cost or market using a first-in, first
out method. Reserves in the amount of $2,685,000 and $2,563,000 were recorded at
June 30, 2005 and September 30, 2004, respectively, for excess and obsolete
inventories. In addition, the Company ascribes no value to certain inventories
of Ahead Communications Systems, Inc., its new subsidiary (see Note 2), which
are over four years old.

Ahead Communications Systems, Inc. which business was acquired on June 30, 2005
had not maintained perpetual inventory records or performed analysis to
establish excess and obsolete inventory reserves. Such record-keeping and
analysis is in process but not complete. Management has used estimates for
purposes of including the new company's inventory balance in the consolidated
balance sheet at June 30, 2005, the date of acquisition. However, there can be
no assurance that such balance will not change upon completion of the
record-keeping and analysis.

                                       10
<PAGE>

5.  Long-Term Debt

<TABLE>
<CAPTION>
Long-term debt consists of (in thousands):                                    June 30,     September 30,
                                                                                2005           2004
--------------------------------------------------------------------------------------------------------
<S>                                                                        <C>             <C>
Term Obligation                                                            $       5,978   $      11,398
PIK Obligation                                                                     2,500           2,500
Notes Payable to Related Parties, net of debt discount of $76 at
    June 30, 2005 and $121 at September 30, 2004                                   1,524           1,479
Debentures                                                                        21,904          21,904
Note Payable                                                                         113               0
--------------------------------------------------------------------------------------------------------
                                                                                  32,019          37,281
Less current portion                                                              32,019          37,281
--------------------------------------------------------------------------------------------------------
                                                                           $           0   $           0
--------------------------------------------------------------------------------------------------------
</TABLE>

For the quarter ended September 30, 2004, the Company would have been in default
of the financial covenant in its loan agreement with its senior secured lenders
had it not obtained a waiver. Since the waiver does not extend to future
financial covenant calculations, which are performed quarterly, or to monthly
payment obligations which the Company cannot be assumed of making, the senior
secured debt (the Term Obligation and PIK Obligation) and the Debentures and
Notes Payable to Related Parties, which contain cross default provisions, are
classified as current liabilities on the accompanying balance sheets at June 30,
2005 and September 30, 2004 (see Note 1). Interest on the PIK Obligation and
Debentures is not required to be paid currently, and interest payments on Notes
Payable to Related Parties have been deferred under agreement with the note
holders. Accrued interest on these items amounted to $4,625,000 and $2,692,000
at June 30, 2005 and September 30, 2004, respectively, and is classified as a
current liability along with the corresponding debt.

Long-term debt matures in amounts totaling $2,326,000 in fiscal 2005, $4,163,000
in fiscal 2006, $3,348,000 in fiscal 2007, and $22,182,000 in fiscal 2008,
assuming that there is no acceleration in the future due to an event of default
that is not waived by the senior secured lenders. Furthermore, if the Term
Obligation, PIK Obligation and Notes Payable to Related Parties are paid in
full, the Debentures become payable in equal monthly installments through
December 31, 2008.

In conjunction with the issuance of a note payable to a related party on
September 30, 2004, the Company issued a warrant, the value of which was
recorded as debt discount. See "Notes Payable to Related Parties" below.

Term Obligation, PIK Obligation and Debentures

Under the terms of the loan and security agreement which became effective
September 15, 2003, minimum principal payments under the Term Obligation are
$250,000 per month. Interest was payable monthly at the annual rate of 7.25%
through December 31, 2003, and thereafter at the greater of (i) 7.25% and (ii)
the prime rate plus 2.5% (the prime rate was 6.25% on June 30, 2005). In
addition, proceeds from the potential sales of non-core assets and certain other
proceeds must be used to reduce the Term Obligation. See Note 2, "Acquisition of
Ahead Communications Systems, Inc. ("ACS") and Recovery on Note Receivable" for
discussion of a $2,747,848 reduction in the Term Obligation on May 5, 2005.

Also effective September 15, 2003, the Company entered into a loan in the
original principal amount of $5.0 million, subject to adjustment, due December
31, 2007 (the "PIK Obligation"). Interest accrues at the same rates as the Term
Obligation. Principal in the amount of $2.5 million and accrued interest thereon
were forgiven under certain terms which expired on December 31, 2004. The amount
owing under the PIK Obligation may be adjusted downward by the Bankruptcy Court.

                                       11
<PAGE>

Secured Debentures with principal and interest due in fiscal 2008 were issued to
unsecured creditors as part of the Company's plan of reorganization.

For further details of the loan and security agreement and a description of the
Term Obligation, PIK Obligation and Debentures, see Note 4, "Reorganization Plan
and Emergence from Chapter 11" included in Item 8 of the Company's annual report
on Form 10-K for the year ended September 30, 2004 as filed with the Securities
and Exchange Commission.

Notes Payable to Related Parties

Pursuant to authorization by the Board of Directors and amendments to the loan
agreement with the Company's senior lenders, the Company has borrowed an
aggregate of $1,600,000 in a series of loans during the period December 30, 2003
through September 30, 2004 from Howard S. Modlin, Chairman of the Board, who has
loaned an aggregate of $1,050,000 and John L. Segall, a Director, who has loaned
an aggregate of $550,000. The loans were made primarily for replacement of
senior indebtedness being repaid with the proceeds. The loans are each for two
years and bear interest accruing from the date of issue, at the rate of 10% per
annum, payable monthly commencing three full months after the date of the loan.
The noteholders have agreed to defer the payment of interest. The notes are
secured by all of the assets of the Company subordinate to the first lien of the
Company's senior lenders who hold the Term and PIK Obligations, and are
convertible into common stock at the option of the holder. The conversion price
of the notes was in excess of the quoted market price of the Company's common
stock on the dates the loans were made. The first such loans aggregate $600,000
and were made on December 30, 2003 with a conversion price of $2.12 per share,
and were made equally by Messrs. Modlin and Segall, or $300,000 each. The second
such loans aggregated $250,000 and were made on March 1, 2004 with a conversion
price of $.8625 per share and were made equally by them, or $125,000 each. The
third such loans aggregated $250,000 and were made on March 31, 2004 with a
conversion price of $.5625 per share and were made equally by them, or $125,000
each. The fourth such loan was made on June 30, 2004 by Mr. Modlin for $250,000
and is convertible at $.42 per share. The fifth such loan was made on September
30, 2004 by Mr. Modlin for $250,000 with half due on September 30, 2005 and the
balance due on September 30, 2006 and, in connection with the loan, the Company
issued to Mr. Modlin a five year warrant to purchase 761,614 shares of common
stock for $.32825 per share. Any shares issued on conversion or exercise of the
warrant will not be registered and must be held for investment without a view to
distribution. The warrant was valued at $121,000 utilizing the Black-Scholes
method and resulted in the related loan being recorded at a corresponding
discount.

6.  Liquidation of UK Subsidiary

In July 2002, the Company's inactive subsidiary, General DataComm Limited (UK),
was turned over to liquidators for the purpose of finalizing the accounts. At
that time, the subsidiary's estimated income tax liability was $375,000 and
amounts due other creditors totaled $338,000 and such amounts were reflected as
liabilities in the Company's consolidated financial statements.

The liquidators have now advised the Company that the income tax liability in
the amount of $5,806 has been agreed with the local authorities. Therefore the
Company has recorded a reduction in income tax reserves and a corresponding
credit in the income tax provision in the amount of $369,194 reflecting this
lower liability.

Furthermore, although all claims and recoveries have not been finalized, the
liquidators have advised that there have been recoveries which will be used to
pay off a portion of all creditor claims. The Company intends to record such
recoveries as income when it receives a final accounting from the subsidiary's
liquidators.

                                       12
<PAGE>

7.   Accounting for Stock-Based Compensation

As permitted under Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation" ("SFAS 123"), the Company has elected
to continue to measure costs for its employee stock compensation plans by using
the accounting methods prescribed by Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees", which allows that no compensation
cost be recognized provided the exercise price of options granted is equal to or
greater than fair market value of the Company's stock at date of grant.

Proforma results, representative of financial results which would have been
reported by the Company if it had adopted the fair value based method of
accounting for stock-based compensation under SFAS No. 123, are summarized below
(amounts in thousands, except per share data):

<TABLE>
<CAPTION>
                                                           Three Months Ended June 30,      Nine Months Ended June 30,

                                                               2004            2005            2004            2005
                                                           ------------    ------------    ------------    ------------
<S>                                                        <C>             <C>             <C>             <C>
Net income (loss), as reported                             $      1,325    $        110    $      4,269    $         40
Deduct:  total stock-based employee compensation
  expense determined under fair value based method
  for all awards                                                    (61)            (20)           (116)            (65)
-----------------------------------------------------------------------------------------------------------------------
Proforma net income (loss)                                        1,264              90           4,153             (25)
Dividends applicable to preferred stock                            (443)           (443)         (1,329)         (1,337)
-----------------------------------------------------------------------------------------------------------------------
Proforma net income (loss) applicable to common and
   Class B stock                                           $        821    $       (353)   $      2,824    $     (1,362)
=======================================================================================================================
Proforma  earnings (loss) per share:
    Basic earnings (loss) per common share                 $       0.22    $       (0.9)   $       0.75    $      (0.34)
    Basic earnings (loss) per Class B share                $       0.20    $       (0.9)   $       0.68    $      (0.34)
    Diluted earnings (loss) per common and Class B Share   $       0.13    $       (0.9)   $       0.47    $      (0.34)
-----------------------------------------------------------------------------------------------------------------------
</TABLE>

The Black-Scholes method was used to compute the proforma amounts presented
above, utilizing the weighted average assumptions summarized below. No
stock-based compensation was granted in fiscal 2004.


                                              2005                    2004
                                              ----                    ----

Risk-free interest rate                       3.69                     N/A
Volatility (%)                                 319%                    N/A
Expected life (in years)                      5.00                     N/A
Dividend yield rate                            nil                     N/A


8.   Gain on Sale of Minority Interest

On November 30, 2004, the Corporation sold its 25% minority interest in Grupo
GDC de Mexico, S.A. de C.V., which had previously been fully reserved, for
$300,000. The proceeds were applied to the Company's outstanding loans with its
senior lenders. In addition, the Company entered into a twelve-month trademark
license agreement with the former Mexican subsidiary for an aggregate license
fee of $150,000, to be amortized in equal monthly installments.

9.   2005 Stock and Bonus Plan

On January 26, 2005, the Board of Directors adopted a new 2005 Stock and Bonus
Plan ("Plan") covering 1,200,000 shares of Common Stock, and the Stock Option
Committee authorized certain options pursuant to the new Plan. The Plan is
similar to the 2003 Stock and Bonus Plan. No shares of Class B common stock are
authorized under the Plan.

                                       13
<PAGE>

Pursuant to the Plan, the Committee granted to Howard S. Modlin, Chief Executive
Officer, a stock option to purchase 551,121 shares at $.61 per share and granted
to each of Lee Paschall, Aletta Richards and John L. Segall, Directors, stock
options to purchase 30,000 shares at $.55 per share, of the Corporation's Common
Stock. The Committee also granted an aggregate of 212,050 options to 75
employees to purchase the Corporation's Common stock at an option price of $.55
per share, including 30,000 options to each of George Best, Vice President,
Sales and Marketing, William G. Henry, Vice President, Finance and
Administration and Principal Financial Officer, and George Gray, Vice President,
Operations and Chief Technology Officer. The options vest in increments of 20%
one, two, three, four and five years after grant and expire ten years after
grant. The shares issuable under such options are not registered under the
Securities Act of 1933 and must be held for investment unless so registered or
an exemption from registration exists. The Corporation plans to register the
shares before the first options are exercisable.

10.  Related Party Transactions

Mr. Howard Modlin, Secretary and a Director of the Company since 1969 and
Chairman of the Board of Directors of the Company since November 2001 and
currently Chairman, President and Chief Executive Officer, is also President of
the law firm of Weisman, Celler Spett & Modlin, P.C. ("WCSM") to whom the
Company was indebted for legal services of $2,179,000 for work performed prior
to the Company's bankruptcy filing in November 2001 and in settlement for which
the Company issued subordinated debentures. The bankruptcy court also approved
$294,000 for work performed by WCSM while the Company operated in bankruptcy.
Furthermore, the Company was indebted to Mr. Modlin for fees for Company
director meetings for which he received subordinated debentures in the total
amount of $16,400. Thereafter, WCSM agreed to work on a certain litigation
matter on a contingency basis. In addition, WCSM estimates that it has unbilled
fees as of June 30, 2005 of approximately $480,000 which have been accrued in
the accompanying 2005 financial statements.

For further information on related party transactions, refer to Note 14 in Item
8 in the Company's annual report on Form 10-K for the fiscal year ended
September 30, 2004 - filed with the Securities and Exchange Commission.

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

Notice Concerning Forward-Looking Statements

THE FOLLOWING DISCUSSION AND ANALYSIS OF THE COMPANY'S FINANCIAL CONDITION AND
THE RESULTS OF OPERATIONS SHOULD BE READ IN CONJUNCTION WITH THE FINANCIAL
STATEMENTS AND RELATED NOTES APPEARING ELSEWHERE IN THIS QUARTERLY REPORT ON
FORM 10-QSB AND IN THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED
SEPTEMBER 30, 2004 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION.

THIS QUARTERLY REPORT ON FORM 10-QSB CONTAINS FORWARD-LOOKING STATEMENTS WITHIN
THE MEANING OF SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
FOR THIS PURPOSE, STATEMENTS CONTAINED HEREIN THAT ARE NOT STATEMENTS OF
HISTORICAL FACT MAY BE DEEMED TO BE FORWARD-LOOKING STATEMENTS. WITHOUT LIMITING
THE FOREGOING, THE WORDS "BELIEVES", "ANTICIPATES", "PLANS", "EXPECTS" AND
SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS. THESE
FORWARD-LOOKING STATEMENTS INVOLVE RISKS AND UNCERTAINTIES AND ARE NOT

                                       14
<PAGE>

GUARANTEES OF FUTURE PERFORMANCE. ACTUAL RESULTS MAY DIFFER MATERIALLY FROM
THOSE INDICATED IN SUCH FORWARD-LOOKING STATEMENTS AS A RESULT OF CERTAIN
FACTORS INCLUDING, BUT NOT LIMITED TO, THOSE SET FORTH UNDER THE HEADING "RISK
FACTORS" BELOW. UNLESS REQUIRED BY LAW, THE COMPANY UNDERTAKES NO OBLIGATION TO
UPDATE ANY FORWARD-LOOKING STATEMENTS OR REASONS WHY ACTUAL RESULTS MAY DIFFER.

Background

The Company has incurred net losses since 1994 and as of September 30, 2004, the
most recent fiscal year end, had an accumulated deficit of $237.2 million. In
2001 after implementing a number of restructuring and cost reduction programs in
an attempt to better align operating cost structure with revenues, three of the
Company's four business units were sold. However, due to the impact of a general
economic downturn and a decline in the telecommunication industry in particular,
and to defaults in payments by the purchasers, the Company did not realize
sufficient proceeds from the sales to satisfy its secured lenders. Revenues of
divisions sold constituted 59% of consolidated revenues in fiscal 2001. By the
end of fiscal 2001 the number of employees declined to 210 employees from 1,019
at the beginning of the year.

As a result of its inability to meet its debt obligations, on November 2, 2001
General DataComm Industries, Inc. and its domestic subsidiaries filed a
voluntary petition for relief under Chapter 11 of the Bankruptcy Code in the
United States Bankruptcy Court for the District of Delaware. Thereafter the
Company consolidated its remaining operations into its owned facility in
Naugatuck, Connecticut and downsized its staff and operating assets to more
properly reflect its reduced operating requirements and currently has 97
employees including the employees of Ahead Communications Systems, Inc. ("ACS")
who accepted employment with the Company.

Pursuant to a reorganization plan approved by the Bankruptcy Court, the Company
emerged from bankruptcy on September 15, 2003.

On June 30, 2005, pursuant to a plan approved by Bankruptcy Court in Connecticut
having jurisdiction over ACS, the Company acquired the assets, certain
liabilities and business of ACS (see Note 2 in the Notes to Condensed
Consolidated Financial Statements included in Item 1 in this Form 10-QSB).

RESULTS OF OPERATIONS

Revenues
<TABLE>
<CAPTION>

                                       Three Months Ended June 30,            Nine Months Ended June 30,

           (in thousands)             2005                     2004            2005                 2004
                                      ----                     ----            ----                 ----
<S>                                  <C>                      <C>            <C>                  <C>
           Revenues                  $3,607                   $3,605         $10,834              $12,800
</TABLE>

Revenues for the three months ended June 30, 2005 increased slightly to
$3,607,000 from $3,605,000 reported for the three months ended June 30, 2004.
The 2005 quarter includes large shipments to Harris Corp. which offset lower
unit sales to large telecommunication carriers and distributors. Three customers
individually represented more than 10% of revenue in the current quarter: Harris
Corp. 34%, Bell Canada 12% and Verizon 11%. Product shipments for the 2005
quarter were comprised primarily of the Company's traditional products including
security-oriented V.34 data sets, digital service units and other network access
products. In the prior year's quarter, the largest customers were Verizon 26%
and Bell Canada 19%.

                                       15
<PAGE>

Revenues for the nine months ended June 30, 2005 decreased 15% to $10,834,000
from $12,800,000 reported for the nine months ended June 30, 2004. The decrease
also reflected lower unit sales into the large carrier market offset in part by
the third quarter 2005 shipments to Harris Corp. and by shipments earlier in the
year of network multiplexing products to Phillips (Italy). The largest customers
in the current nine month period were Bell Canada 15%, Qwest 13%, Harris Corp.
13%, Verizon 11% and Phillips 8%, as compared to Bell Canada 16%, Verizon 16%
and Sunbelt Telecommunications 11% (distributor to SBC Communications) in the
prior nine month period.

A decline in demand for the Company's products began in fiscal 2001 due to
economic and industry-wide factors affecting the telecommunications industry,
including financial constraints affecting customers and over-capacity in
customers' markets. The Company anticipates that the current reduced capital
spending levels by its customers will continue to affect sales until there is an
overall recovery in the telecommunications market, which, although there is some
evidence of improvement, may not change significantly in 2005. Furthermore, even
if there is a recovery in the overall telecommunications market, there is no
assurance that orders for the Company's products will increase. Accordingly, the
ability to forecast future revenue trends in the current environment is
difficult.

Gross Margin
<TABLE>
<CAPTION>
                                                Three Months Ended June 30,        Nine Months Ended June 30,

           (in thousands)                          2005             2004             2005              2004
                                                   ----             ----             ----              ----
<S>                                               <C>              <C>              <C>               <C>
           Gross margin                           $1,972           $2,061           $6,324            $7,381
           Percentage of revenues                   54.7%            57.2%            58.4%             57.7%
</TABLE>

Gross margin, as a percentage of sales, in the three months ended June 30, 2005
was 54.7% as compared to 57.2% in the three months ended June 30, 2004, or
decrease of 2.5%. The trend of lower historical product demand resulted in a
higher provision for excess and obsolete inventories in the 2005 quarter and
this reduced the gross margin percentage by 5.5% compared to the 2004 quarter.
This decrease was offset in part by a 4.4% positive impact on the gross margin
percentage over the prior quarter due to the sale of older inventories that had
previously been written (off (based on the Company's accounting policy for
determining obsolescence). Other gross margin percentage impacts include lower
chip and other component prices realized in the 2004 quarter (-2.3%), lower
product repair revenue in the 2005 quarter (-1.1%) and favorable mix of products
sold and other favorable costs in the 2005 quarter (+2.0%).

Gross margin, as a percentage of sales, in the nine months ended June 30, 2005
was 58.4% as compared to 57.7% in the nine months ended June 30, 2004, or an
increase of 0.7%. Sales of older, previously written off inventories constituted
18% of revenues in the current nine month period and resulted in a gross margin
improvement of 7.0%. Higher product repair revenues added 0.6% to gross profit
margin. These increases were offset with unfavorable mix of product sales
(-1.8%), component prices (-2.9%) and inventory obsolescence charges (-2.2%).

In future periods, the Company's gross margin will vary depending upon a number
of factors, including the mix of products sold, the cost of products
manufactured at subcontract facilities, the channels of distribution, the price
of products sold, discounting practices, price competition, increases in
material costs and changes in other components of cost of sales. As and to the
extent the Company introduces new products, it is possible that such products
may have lower gross profit margins than other established products in higher
volume production. Accordingly, gross margin as a percentage of sales may vary.

                                       16
<PAGE>

Selling, General and Administrative

<TABLE>
<CAPTION>
                                                Three Months Ended June 30,        Nine Months Ended June 30,

           (in thousands)                          2005             2004             2005              2004
                                                   ----             ----             ----              ----
<S>                                               <C>              <C>              <C>               <C>
           Selling, general and administrative    $1,323           $1,156           $3,658            $4,758
           Percentage of revenues                   36.7%            32.1%            33.8%             37.2%
</TABLE>

The Company's selling, general and administrative ("SG&A") expenses increased to
$1,323,000, or 36.7% of revenues in the three months ended June, 30, 2005 from
$1,156,000 or 32.1% of revenues in the three months ended June 30, 2004. The net
increase in spending in the quarter was $167,000, or 14%. In the 2004 quarter,
the Company negotiated a contingent fee arrangement with its law firm, a related
party, which resulted in a reduction of $225,000 in legal expense in the quarter
and accounts for part of the lower SG&A expense in the prior year. Offsetting
this were lower payroll and payroll-related costs ($176,000) in the 2005 quarter
resulting from a reduced number of employees, Company-mandated salary and work
week reductions and lower sales commissions due to lower sales levels. Other net
increases in operating expenses in the 2005 quarter were $118,000.

For the nine months ended June 30, 2005, SG&A decreased to $3,658,000, or 33.8%
of revenues, from $4,758,000, or 37.2% of sales in the nine months ended June
30, 2004. The 23%, or $1,100,000 decrease in 2005 spending was due to lower
payroll and payroll-related costs ($846,000); reduced sales force travel
expenses ($147,000); reduced sales, use and franchise tax expenses ($384,000)
due to resolution of open issues; increase in professional fees ($388,000) due
primarily to the reduction in the 2004 quarter mentioned above and other
reductions in operating expenses due to cost reduction efforts ($111,000).

Research and Product Development

<TABLE>
<CAPTION>
                                                Three Months Ended June 30,        Nine Months Ended June 30,

           (in thousands)                          2005             2004             2005              2004
                                                   ----             ----             ----              ----
<S>                                               <C>              <C>              <C>               <C>
           Research and product development       $  553           $  670           $1,633            $2,124
           Percentage of revenues                   15.3%            18.6%            15.1%             16.6%
</TABLE>

Research and product development ("R&D") expenses decreased to $553,000 in the
three months ended June 30, 2005 as compared to $670,000 in the three months
ended June 30, 2004, due to lower labor costs resulting from a 20% salary
reduction and a reduced number of engineers.

For the same reasons, R&D expenses for the nine months ended June 30, 2005
decreased to $1,633,000 from $2,124,000 as compared to the comparable prior year
period.

Other Income (Expense)

Interest expense decreased to $845,000 in the three months ended June 30, 2005
from $869,000 in the three months ended June 30, 2004. Interest expense
decreased to $2,586,000 in the nine months ended June 30, 2005 from $2,659,000
in the nine months ended June 30, 2004. The reductions were due to principal
payments made on the Company's Term Obligation offset by higher interest rates
on Notes Payable to Related Parties and higher variable interest rates on the
senior secured debt.

                                       17
<PAGE>

Other items included in other income (expense) for the three months ended June
30, 2005 were $1,989,000 from the recovery of a note receivable (see Note 2 in
the Notes to Condensed Consolidated Financial Statements included in Item 1 in
this Form 10-QSB) and the net amount of $61,000 which includes $15,000 in sales
of components no longer used and $38,000 received from a tradename license. For
the three months ended June 30, 2004, other income (expense) included a net
expense of $38,000 comprised of $57,000 in foreign exchange losses offset in
part by $15,000 in sales of components no longer used.

Other items included in other income (expense) for the nine months ended June
30, 2005 and 2004 totaled $5,194,000 and $99,000, respectively. The 2005 amount
includes $4,737,000 from the recovery of a note receivable (see Note 2 in the
Notes to Condensed Consolidated Financial Statements included in Item 1 in this
Form 10-QSB), $300,000 profit on sale of a 25% minority interest in a Mexican
Company, $79,000 in sales of components no longer used, $82,000 received from a
tradename license and $23,000 received from settlement of litigation, offset by
foreign exchange losses of $75,000. The 2004 amount includes $89,000 from the
sale of excess assets (furniture, equipment and components), $33,000 in
reimbursement of retirement plan administrative expenses, offset by foreign
exchange losses of $55,000.

Reorganization Items

Reorganization items in the three months ended June 30, 2005 and June 30, 2004
include $12,000 and $788,000, respectively, in reduced claims from unsecured
creditors in the Company's bankruptcy case due to challenges raised by the
Company and successfully concluded. Similarly, reorganization items in the nine
months ended June 30, 2005 and June 30, 2004 include $258,000 and $2,118,000,
respectively, associated with reduction of such claims.

Provision for Income Taxes

The tax provision for the nine months ended June 30, 2005 includes a credit of
$369,194 due to the favorable settlement of a foreign income tax claim (see Note
6 in Notes to Condensed Consolidated Financial Statements in Item 1 in this Form
10-QSB). Apart from recording this settlement, no federal income tax provisions
or tax benefits were provided in the three and nine months ended June 30, 2005
and 2004 due to the valuation allowance provided against the net change in
deferred tax assets. The Company established a full valuation allowance against
its net deferred tax assets due to the uncertainty of realization of benefits of
the net operating loss carryforwards from prior years. The Company has federal
tax credit and net operating loss carryforwards of approximately $11.6 million
and $200.5 million, respectively, as of September 30, 2004. Income tax
provisions for the three and nine months ended June 30, 2005 and 2004 include
minimum state taxes.

Liquidity and Capital Resources
<TABLE>
<CAPTION>
                                                                      June 30,      September 30,

           (in thousands)                                               2005            2004
                                                                    ------------    ------------
<S>                                                                 <C>             <C>
         Cash and cash equivalents                                  $      1,035    $        586
         Working capital (deficit)                                       (37,061)        (40,938)
         Total assets                                                     12,746          11,264
         Long-term debt, including current portion                        32,019          37,281
         Total liabilities (excluding redeemable preferred stock)         46,511          49,298
</TABLE>

                                       18
<PAGE>

<TABLE>
<CAPTION>
                                                    Three Months Ended June 30,        Nine Months Ended June 30,

                                                       2005             2004             2005              2004
                                                       ----             ----             ----              ----
<S>                                                   <C>              <C>              <C>               <C>
           Net cash provided (used) by:
                Operating activities                     188              408            2,166              (337)
                Investing activities including
                acquisition cash of $835               3,576               (5)           3,575                77

                Financing activities                  (3,662)            (500)          (5,292)           (1,277)
</TABLE>

Note: Significant risk factors exist due to the Company's limited financial
resources and dependence on achieving future positive cash flows in order to
satisfy its obligations and avoid a default under its loan and debenture
obligations. See "Risk Factors" below for further discussion.

Cash Flows

Net cash provided by operating activities totaled $188,000 in the three months
ended June 30, 2005 compared to net cash provided by operating activities of
$408,000 in the three months ended June 30, 2004. The net income in the 2005
quarter was $1,325,000. Non-cash items included in this net income were expenses
for depreciation of $70,000, gains on claim reductions of $12,000, increase in
inventory obsolescence reserves $164,000, and a recovery for a note receivable
of $1,989,000. Such recovery represents the non-cash portion of the net assets
acquired and liabilities assumed of Ahead Communications Systems, Inc. ("ACS")
which the Company acquired as final settlement of a note receivable from ACS
(see Note 2 in the Notes to Condensed Consolidated Financial Statements included
in Item 1 in this Form 10-QSB). Accounts receivable, net of acquisition,
increased $811,000 in the 2005 quarter due to a large proportion of product
shipments not occurring until later in the quarter. Inventories, net of
acquisition, were lower by $217,000 as the Company was able to achieve shipments
of on-hand inventories to satisfy customer orders and generate a source of cash
through reduced purchasing. Other sources of cash include unpaid interest which
accrued on the Company's debt and increased $631,000; tax liabilities increased
$198,000 primarily for property taxes; and unpaid professional fees increased
$169,000. Other sources of cash totaled a net amount of $226,000.

The net income in the 2004 quarter was $110,000. Non-cash items included in this
net income were expenses for depreciation of $49,000 and gains on claim
reductions of $788,000. A reduction in accounts receivable resulted in a source
of cash of $942,000. Unpaid interest which accrued on the Company's debt
increased $591,000. Unpaid professional fees were reduced $325,000 due primarily
to the contingent fee negotiation in 2004 described above in the SG&A section. A
reduction in accrued property tax accounted for a decrease in cash of $186,000.
Other sources of funds totaled a net amount of $15,000.

Net cash provided by operating activities totaled $2,166,000 in the nine months
ended June 30, 2005 compared to net cash used of $337,000 in the nine months
ended June 30, 2004. The net income in 2005 was $4,269,000. Non-cash items
included were expenses for depreciation of $190,000, gains on claim reductions
of $258,000, a reduction in the reserve for foreign income taxes of $369,000, an
increase in inventory obsolescence reserves of $164,000 and a reduction in the
reserve for a note receivable of $3,902,000. An increase in accounts receivable
amounted to $250,000. Inventories decreased by $1,048,000 as the Company
utilized shipments of on-hand inventories to satisfy orders. Other sources of
funds totaled a net amount of $146,000.

                                       19
<PAGE>

The net loss in the 2004 fiscal year was $40,000. Non-cash items included were
expenses for depreciation of $143,000 and gains on claim reductions of
$2,118,000. A decrease in accounts receivable of $661,000 and in inventories of
$642,000 provided fund sources of $1,303,000. Decreases in accrued payroll
amounted to $516,000. Unpaid interest which accrued on the Company's debt
increased $1,839,000. Other sources of cash totaled a net amount of $211,000.

Cash provided by investing activities in the quarter ended June 30, 2005 was
$3,576,000 due to collections of notes receivable of $3,583,000 offset by $7,000
of capital equipment expenditures. This compares to $5,000 of capital equipment
expenditures in the quarter ended June 30, 2004.

For the nine months ended June 30, 2005, cash provided by investing activities
included note receivable collections of $3,594,000, offset in part by $19,000 of
equipment purchases. For the nine months ended June 30, 2004, cash provided by
investing activities was $77,000 due to the collection of a note receivable of
$111,000 offset by $34,000 of equipment purchases.

Cash used by financing activities of $3,662,000 for the quarter ended June 30,
2005 represented $3,561,000 in principal payments on the Company's term
obligation and $101,000 in installment payments on notes payable.

Cash used by financing activities of $500,000 for the same time period one year
ago represented principal payments of $750,000 on the Company's term obligation
offset by $250,000 of proceeds received from notes payable to related parties.

Cash used in financing activities was $5,292,000 for the nine months ended June
30, 2005 as compared to $1,277,000 for the nine months ended June 30, 2004.
Principal payments on the term obligation were $5,405,000 and $2,627,000 for the
nine months ended June 30, 2005 and 2004, respectively. Proceeds from the
issuance of notes payable provided $214,000 of cash in the nine months ended
June 30, 2005 while proceeds from the issuance of notes payable to related
parties provided $1,350,000 of cash in the nine months ended June 30, 2004.
Payments on notes payable were $101,000 in nine months ended June 30, 2005.

Liquidity

The Company has no current ability to borrow additional funds. It must,
therefore, fund operations from cash balances and cash generated from operating
activities. The Company has significant short-term obligations including payment
of bankruptcy-related and other professional fees, delinquent property taxes,
priority tax claims and monthly payments of principal and interest (currently
such principal and interest totals approximately $290,000 each month) under its
senior loan agreement. Furthermore, the Company has significant outstanding
obligations to pay total long-term debt of approximately $32.0 million, along
with interest thereon.

The Company's failure to make required payments under the senior loan agreement
would constitute an event of default. In addition, the Company is required to
meet a financial covenant to avoid an event of default (see Note 5 to Notes to
Financial Statements included in Item 1 to this Form 10-QSB). Although the
Company was not in default of the financial covenant as of September 30, 2004,
it was necessary for the Company to obtain a waiver of compliance with such
covenant in order to avoid a default as the Company did not meet the financial
covenant requirement.

                                       20
<PAGE>

Since emerging from bankruptcy, the Company has incurred losses before recovery
on a note receivable, reorganization items and income taxes of approximately
$4.5 million. Furthermore, the ability of the Company to meet cash flow and loan
covenant requirements is directly affected by the factors described below in
"Risk Factors". There can be no assurance that the Company will be able to avoid
a default on the senior loan agreement. If there is such a default, the senior
secured lenders may accelerate payment of the outstanding debt ($8.5 million at
June 30, 2005) and foreclose on their security interests which likely would
require the Company to again file for bankruptcy protection.

The Company emerged from Chapter 11 bankruptcy on September 15, 2003 pursuant to
a court-approved plan of reorganization. Under this plan the Company intends to
pay all creditors 100% of their allowed claims based upon a five year business
plan. The ability to meet the objectives of this business plan is directly
affected by the factors described below in the "Risk Factors" section. The
Company cannot assure investors that it will be able to obtain new customers or
to generate the increased revenues required to meet its business plan
objectives. In addition, in order to execute the business plan, the Company may
need to seek additional funding through public or private equity offerings, debt
financings or commercial partners. Since the Company has no current ability to
borrow additional funds, it cannot assure investors that it will obtain funding
on acceptable terms, if at all. If the Company is unable to generate sufficient
revenues or access capital on acceptable terms, it may be required to (a) obtain
funds on unfavorable terms that may require the Company to relinquish rights to
certain of technologies or that would significantly dilute the Company's
stockholders and/or (b) significantly scale back current operations. Either of
these two possibilities would have a material adverse effect on the Company's
business, financial condition and results of operations.

Since filing for Chapter 11 bankruptcy protection on November 2, 2001,
operations have been funded primarily through cash generated from operations and
loans from related parties. Proceeds realized from sales and liquidations of
non-core assets were required to be used to pay down the senior secured debt.

At June 30, 2005 the Company's principal source of liquidity included cash and
cash equivalents of $1,035,000 compared to $586,000 at September 30, 2004. At
June 30, 2005, the Company's working capital was a deficit of approximately
$37.0 million. Negative working capital reflects the classification of all
long-term secured debt as current liabilities as a result of non-compliance with
a financial covenant for which a waiver was obtained (see Note 5 of the Notes to
Condensed Consolidated Financial Statements included in Item 1 in this Form
10-QSB).

The Company has significant unpaid professional fees (approximately $1.6
million), and delinquent property taxes (approximately $485,000) at June 30,
2005 that are expected to be paid in fiscal 2005. In addition, the next
installment of priority tax claims (approximately $290,000) is due on September
15, 2005. In order to meet these and other future payments, the Company must
achieve revenue growth while at the same time limiting investments in
inventories and capital assets.

As a result of the potential liquidity and cash flow risks described above, the
Company's independent auditors expressed uncertainty about the Company's ability
to continue as a going concern in their opinion on the Company's fiscal 2004
financial statements.

Management has responded to such risks as part of an ongoing strategy by
restructuring its sales force, increasing factory shutdown time, containing
expenses and reducing the size of the employee workforce. In addition, in fiscal
2004 the Company obtained $1.6 million from loans from related parties to be
used primarily for replacement of senior indebtedness being repaid with the
proceeds (see Note 5 of the Notes to Condensed Consolidated Financial Statements
included in Item 1 in this Form 10-QSB). The Company also is actively marketing
for sale its land and building and pursuing other asset recoveries, the proceeds

                                       21
<PAGE>

of which would be used to reduce senior secured debt and related interest. On
May 5, 2005 the Company received $2.7 million in recovery on a note receivable
and used the proceeds to pay down senior secured debt (see Note 2 of the Notes
to Condensed Consolidated Financial Statements included in Item 1 of this Form
10-QSB).

Critical Accounting Policies

The Company's financial statements and accompanying notes are prepared in
accordance with generally accepted accounting principles in the United States of
America for interim financial statements, the instructions to Form 10-QSB and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for year end financial statements. Furthermore, certain estimates were used to
value the assets acquired and liabilities assumed in an acquisition on June 30,
2005 and such estimates are subject to change when additional information
concerning valuation is completed (see Note 2 of the Notes to Condensed
Consolidated Financial Statements included in Section 1 in this Form 10-QSB).
Preparing financial statements requires management to make estimates and
assumptions that affect the reported amounts of assets, liabilities, revenue and
expenses. Management bases its estimates and judgements on historical experience
and on various other factors that are believed to be reasonable under the
circumstances. Due to the inherent uncertainty involved in making estimates,
actual results reported in future periods might be based upon amounts that
differ from those estimates. The following represent what the Company believes
are among the critical accounting policies most affected by significant
management estimates and judgements.

Revenue Recognition. The Company recognizes a sale when the product is shipped
and the following four criteria are met upon shipment: (1) persuasive evidence
of an arrangement exists; (2) title and risk of loss transfers to the customer;
(3) the selling price is fixed or determinable; and (4) collectibility is
reasonably assured. A reserve for future product returns is established at the
time of the sale based on historical return rates and return policies including
stock rotation for sales to distributors that maintain a stock of the Company's
products. Service revenue is either recognized when the service is performed or,
in the case of maintenance contracts, on a straight-line basis over the term of
the contract.

Warranty Reserves - The Company offers warranties of various lengths to our
customers depending on the specific product and the terms of our customer
purchase agreements. Standard warranties require the Company to repair or
replace defective product returned during the warranty period at no cost to the
customer. An estimate for warranty-related costs is recorded based on actual
historical return rates and repair costs at the time of sale. On an on-going
basis, management reviews these estimates against actual expenses and makes
adjustments when necessary. While warranty costs have historically been within
expectations of the provision established, there is no guarantee that the
Company will continue to experience the same warranty return rates or repair
costs as in the past. A significant increase in product return rates or the
costs to repair our products would have a material adverse impact on the
Company's operating results.

Allowance for Doubtful Accounts. The Company estimates losses resulting from the
inability of its customers to make payments for amounts billed. The
collectability of outstanding invoices is continually assessed. Assumptions are
made regarding the customer's ability and intent to pay, and are based on
historical trends, general economic conditions and current customer data. Should
our actual experience with respect to collections differ from these assessments,
there could be adjustments to our allowance for doubtful accounts.

Note Receivable Reserve. In August 2001, the Company received a note in the
amount of $17.0 million as partial consideration for the sale of its Broadband
Systems division and retained a security interest in the underlying assets sold.
Shortly thereafter, the Company, the purchaser (Ahead Communications Systems,

                                       22
<PAGE>

Inc.) and the purchaser's parent company in Austria (Ahead Communications
Systems AG) which had guaranteed payment of the note, all filed for bankruptcy
protection, the purchaser defaulted on the note payment and disputes arose
relating to the division sale agreements. As a result, the Company established a
valuation reserve for a substantial portion of the note and recorded a related
loss in fiscal 2001. On May 5, 2005 the company received a $2.7 million recovery
on the note and used the proceeds to pay down senior secured debt. On June 30,
2005 final settlement of the note occurred when the business of Ahead
Communications Systems, Inc. was acquired.

Inventories. The Company values inventory at the lower of cost or market. Cost
is computed using standard cost, which approximates actual cost on a first-in,
first-out basis. Agreements with certain customers provide for return rights.
The Company is able to reasonably estimate these returns and they are accrued
for at the time of shipment. Inventory quantities on hand are reviewed on a
quarterly basis and a provision for excess and obsolete inventory is recorded
based primarily on product demand for the preceding twelve months. Historical
product demand may prove to be an inaccurate indicator of future demand in which
case the Company may increase or decrease the provision required for excess and
obsolete inventory in future periods. The Company has possession of inventory,
from a former division that was sold in 2001 and reacquired on June 30, 2005,
which has been written off for financial reporting purposes. If the Company is
able to sell inventory in the future that has been previously written down or
off, such sales will result in higher than normal gross margin.

Furthermore, the acquired business, Ahead Communications Systems, Inc. had not
maintained perpetual inventory records or performed analysis to establish excess
and obsolete inventory reserves. Such record-keeping and analysis is in process
but not complete. Management has used estimates for purposes of including the
new Company's inventory balance in the consolidated balance sheet at June 30,
2005, the date of acquisition. However, there can be no assurance that such
balance will not change upon completion of the record-keeping and analysis.

Deferred Tax Assets. The Company has provided a full valuation allowance related
to its deferred tax assets. In the future, if sufficient evidence of the
Company's ability to generate sufficient future taxable income in certain tax
jurisdictions becomes apparent, the Company will be required to reduce its
valuation allowances, resulting in income tax benefits in the Company's
consolidated statement of operations. Management evaluates the realizability of
the deferred tax assets and assesses the need for the valuation allowance each
year.

Impairment of Long-Lived Assets. The Company assesses the impairment of
long-lived assets whenever events or changes in circumstances indicate that the
carrying value may not be recoverable under the guidance prescribed by SFAS No.
144. The Company's long-lived assets consist of real estate, property and
equipment. At June 30, 2005 and September 30, 2004, real estate represents the
only significant remaining long-lived asset that has not been fully written down
for impairment.

Recent Accounting Pronouncements

In December 2003, the FASB revised Interpretation No. 46, Consolidation of
Variable Interest Entities. This interpretation of Accounting Research Bulletin
No. 51 Consolidated Financial Statements, addresses consolidation of variable
interest entities. FIN 46 requires certain variable interest entities to be
consolidated by the primary beneficiary if the entity does not effectively
disperse risks among the parties involved. The provisions are effective no later
than the end of the first reporting period that ends after March 15, 2004. The
Company has no variable interest entities and accordingly the adoption of this
Interpretation did not have a material impact on the Company's financial
position or results of operations.

                                       23
<PAGE>

FASB Statement 123 (Revision 2004), "Share-Based Payment," was issued in
December 2004 and will be effective for the Company beginning fiscal 2006. The
new statement requires all share-based payments to employees to be recognized in
the financial statements based on their fair values. The Company currently
accounts for its share-based payments to employees under the intrinsic value
method of accounting set forth in Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees." Additionally, the Company complies
with the stock-based employer compensation disclosure requirements of SFAS No.
148, "Accounting for Stock-Based Compensation - Transition and Disclosure, an
amendment of FASB Statement No. 123." The Company plans to adopt the new
statement in its financial statements for the quarter and year ending September
30, 2006.

RISK FACTORS

THIS QUARTERLY REPORT ON FORM 10-QSB CONTAINS FORWARD-LOOKING STATEMENTS WITHIN
THE MEANING OF SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
FOR THIS PURPOSE, STATEMENTS CONTAINED HEREIN THAT ARE NOT STATEMENTS OF
HISTORICAL FACT MAY BE DEEMED TO BE FORWARD-LOOKING STATEMENTS. WITHOUT LIMITING
THE FOREGOING, THE WORDS "BELIEVES", "ANTICIPATES", "PLANS", "EXPECTS" AND
SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS. THESE
FORWARD-LOOKING STATEMENTS INVOLVE RISKS AND UNCERTAINTIES AND ARE NOT
GUARANTEES OF FUTURE PERFORMANCE. ACTUAL RESULTS MAY DIFFER MATERIALLY FROM
THOSE INDICATED IN SUCH FORWARD-LOOKING STATEMENTS AS A RESULT OF CERTAIN
FACTORS INCLUDING, BUT NOT LIMITED TO, THOSE SET FORTH UNDER THIS HEADING.

     GDC Limited and Negative Operating History Since Emerging from Bankruptcy.
The Company emerged from bankruptcy on September 15, 2003. The Company had
voluntarily filed for protection under Chapter 11 of the US Bankruptcy Code on
November 2, 2001, after incurring seven consecutive years of losses and selling
three of its four operating divisions in 2001. Accordingly, an investor in our
common stock must evaluate the risks, uncertainties, and difficulties frequently
encountered by a Company emerging from Chapter 11 and that operates in rapidly
evolving markets such as the telecommunications equipment industry.

Due to the Company's limited and negative operating history and poor performance
since emergence, the Company may not successfully implement any of its
strategies or successfully address these risks and uncertainties. As described
by the following factors, past financial performance should not be considered to
be a reliable indicator of future performance, and investors should not use
historical trends to anticipate results or trends in future periods.

     Limited Financial Resources and Risk of Default. The Company has virtually
no current ability to borrow additional funds. It must, therefore, substantially
fund operations from cash balances and cash generated from operating activities.
The Company has significant short term obligations including payment of
bankruptcy-related and other professional fees, delinquent property taxes,
priority tax claims and monthly payments of principal and interest (currently
such principal and interest totals approximately $290,000 per month) under its
new loan agreement. Furthermore, the Company has significant outstanding
obligations and commitments (see Item 7 of the Company's annual report on Form
10-K for the year ended September 30, 2004 as filed with the Securities and
Exchange Commission, in the section on "Liquidity", for additional discussion of
this Risk Factor and the Company's contractual cash obligations as of September
30, 2004).

                                       24
<PAGE>

The Company's failure to make required payments under the senior loan agreement
would constitute an event of default. In addition, the Company is required to
meet a financial covenant to avoid an event of default (see Notes 1 and 4 to
Notes to Financial Statements included in Item 8 of the Company's Annual Report
on Form 10-K for the year ended September 30, 2004 as filed with the Securities
and Exchange Commission). As of September 30, 2004, it was necessary to obtain a
waiver of compliance with such covenant in order to avoid a default as the
Company did not meet the financial covenant requirement.

Since emerging from bankruptcy, the Company incurred losses before recoveries on
note receivable, reorganization items and income taxes of approximately $4.5
million. Furthermore, the ability of the Company to meet cash flow and loan
covenant requirements is directly affected by the factors described in this
"Risk Factors" section.

There can be no assurance that the Company will be able to avoid a default on
the new loan agreement. If there is such a default, the senior secured lenders
may accelerate payment of the outstanding debt ($8.5 million at June 30, 2005)
and foreclose on their security interests which likely would require the Company
to again file for bankruptcy protection. In addition, the Company's senior loan
agreement provides the lenders with warrants to (i) purchase up to 51%
(currently 20%) of the Company's common stock at $.01 per share in the event of
default, and (ii) purchase 10% of the Company's common stock if the debt owing
to them is not fully paid by December 31, 2004. Such debt was not fully paid by
December 31, 2004. Both such warrants and any common stock issued thereunder
will be cancelled if the senior lender's outstanding debt is fully paid by
December 31, 2007.

     Dependence on Legacy and Recently Introduced Products and New Product
Development. The Company's future results of operations are dependent on market
acceptance of existing and future applications for the Company's current
products and new products in development. The majority of sales continue to be
provided by the Company's legacy products, primarily the DSU/CSU, V.34 lines
which represented approximately 80% of net product sales in fiscal 2004 and in
the first nine months of fiscal 2005. The Company anticipates that net sales
from legacy products will decline over the next several years and net sales of
new products will increase at the same time, with significant quarterly
fluctuations possible, and without assurance that sales of new products will
increase at the same time.

Market acceptance of the Company's recently introduced and future product lines,
including those of ACS, is dependent on a number of factors, not all of which
are in the Company's control, including the continued growth in the use of
bandwidth intensive applications, continued deployment of new telecommunication
services, market acceptance of multiservice access devices, the availability and
price of competing products and technologies, and the success of the Company's
sales and marketing efforts. Failure of the Company's products to achieve market
acceptance would have a material adverse effect on the Company's business,
financial condition and results of operations. Failure to introduce new products
in a timely manner in order to replace sales of legacy products could cause
customers to purchase products from competitors and have a material adverse
effect on the Company's business, financial condition and results of operations.

New products under development may require additional development work,
enhancement and testing or further refinement before the Company can make them
commercially available. The Company has in the past experienced delays in the
introduction of new products, product applications and enhancements due to a
variety of internal factors, such as reallocation of priorities, financial
constraints, difficulty in hiring sufficient qualified personnel, and unforeseen
technical obstacles, as well as changes in customer requirements. Such delays
have deferred the receipt of revenue from the products involved. If the
Company's products have performance, reliability or quality shortcomings, then
the Company may experience reduced orders, higher manufacturing costs, delays in
collecting accounts receivable, and additional warranty and service expenses.

                                       25
<PAGE>

     Customer Concentration. The Company's historical customers have consisted
primarily of RBOCs, long distance service providers, wireless service providers,
and resellers who sell to these customers. The market for the services provided
by the majority of these service providers has been influenced largely by the
passage and interpretation of the Telecommunications Act of 1996 (the "1996
Act"). Service providers require substantial capital for the development,
construction, and expansion of their networks and the introduction of their
services. The ability of service providers to fund such expenditures often
depends on their ability to budget or obtain sufficient capital resources. Over
the past several years, resources made available by these customers for capital
acquisitions have declined, particularly due to recent negative market
conditions in the United States. If the Company's current or potential service
provider customers cannot successfully raise the necessary funds, or if they
experience any other adverse effects with respect to their operating results or
profitability, their capital spending programs may be adversely impacted which
could materially adversely affect the Company's business, financial condition
and results of operations.

A small number of customers have historically accounted for a majority of the
Company's sales. Sales to the Company's top five customers accounted for 56% and
61% of sales in fiscal 2004 and 2003, respectively. Ahead Communications
Systems, Inc., whose business was acquired by the Company on June 30, 2005, also
has a high concentration of sales in a few enterprise customers. There can be no
assurance that the Company's current customers will continue to place orders
with the Company, that orders by existing customers will continue at the levels
of previous periods, or that the Company will be able to obtain orders from new
customers. GDC expects the economic climate and conditions in the
telecommunication equipment industry to remain unpredictable in fiscal 2005, and
possibly beyond. The loss of one or more of service provider or enterprise
customers, such as occurred during the past three years through industry
consolidation or otherwise, could have a material adverse effect on the
Company's sales and operating results. A bankruptcy filing by one or more of the
Company's major customers could materially adversely affect the Company's
business, financial condition and results of operations.

     Dependence on Key Personnel. The Company's future success will depend to a
large extent on the continued contributions of its executive officers and key
management, sales and technical personnel. Each of the Company's executive
officers, and key management, sales and technical personnel would be difficult
to replace. The Company does not have employment contracts with its key
employees. The Company implemented significant wage and staff reductions in
recent years, which may make it more difficult to attract and retain key
personnel. The loss of the services of one or more of the Company's executive
officers or key personnel, or the inability to attract qualified personnel,
could delay product development cycles or otherwise could have a material
adverse effect on the Company's business, financial condition and results of
operations.

     Dependence on Key Suppliers and Component Availability. The Company
generally relies upon several contract manufacturers to assemble finished and
semi-finished goods. The Company's products use certain components, such as
microprocessors, memory chips and pre-formed enclosures that are acquired or
available from one or a limited number of sources. Component parts that are
incorporated into board assemblies are sourced directly by the Company from
suppliers. The Company has generally been able to procure adequate supplies of
these components in a timely manner from existing sources. While most components
are standard items, certain application-specific integrated circuit chips used
in many of the Company's products are customized to the Company's
specifications. None of the suppliers of components operate under contract.
Additionally, availability of some standard components may be affected by market
shortages and allocations. The Company's inability to obtain a sufficient
quantity of components when required, or to develop alternative sources due to
lack of availability or degradation of quality, at

                                       26
<PAGE>

acceptable prices and within a reasonable time, could result in delays or
reductions in product shipments which could materially adversely affect the
Company's operating results in any given period. In addition, as referenced
above the Company relies heavily on outsourcing subcontractors for production.
The inability of such subcontractors to deliver products in a timely fashion or
in accordance with the Company's quality standards could materially adversely
affect the Company's operating results and business.

The Company uses internal forecasts to manage its general finished goods and
components requirements. Lead times for materials and components may vary
significantly, and depend on factors such as specific supplier performance,
contract terms, and general market demand for components. If orders vary from
forecasts, the Company may experience excess or inadequate inventory of certain
materials and components, and suppliers may demand longer lead times and higher
prices. From time to time, the Company has experienced shortages and allocations
of certain components, resulting in delays in fulfillment of customer orders.
Such shortages and allocations may occur in the future, and could have a
material adverse effect on the Company's business, financial condition and
results of operations.

     Fluctuations in Quarterly Operating Results. The Company's sales are
subject to quarterly and annual fluctuations due to a number of factors
resulting in more variability and less predictability in the Company's
quarter-to-quarter sales and operating results. As a small number of customers
have historically accounted for a majority of the Company's sales, order
volatility by any of these major customers has had and may have an impact on the
Company in the prior, current and future fiscal years.

Most of the Company's sales require short delivery times. The Company's ability
to affect and judge the timing of individual customer orders is limited. Large
fluctuations in sales from quarter-to-quarter could be due to a wide variety of
factors, such as delay, cancellation or acceleration of customer projects, and
other factors discussed below. The Company's sales for a given quarter may
depend to a significant degree upon planned product shipments to a single
customer, often related to specific equipment or service deployment projects.
The Company has experienced both acceleration and slowdown in orders related to
such projects, causing changes in the sales level of a given quarter relative to
both the preceding and subsequent quarters.

Delays or lost sales can be caused by other factors beyond the Company's
control, including late deliveries by the third party subcontractors the Company
is using to outsource its manufacturing operations and by vendors of components
used in a customer's products, slower than anticipated growth in demand for the
Company's products for specific projects or delays in implementation of projects
by customers and delays in obtaining regulatory approvals for new services and
products. Delays and lost sales have occurred in the past and may occur in the
future. The Company believes that sales in the past have been adversely impacted
by merger and restructuring activities by some of its top customers. These and
similar delays or lost sales could materially adversely affect the Company's
business, financial condition and results of operations. See "Customer
Concentration" and "Dependence on Key Suppliers and Component Availability".

The Company's backlog at the beginning of each quarter typically is not
sufficient to achieve expected sales for that quarter. To achieve its sales
objectives, the Company is dependent upon obtaining orders in a quarter for
shipment in that quarter. Furthermore, the Company's agreements with certain of
its customers typically provide that they may change delivery schedules and
cancel orders within specified timeframes, typically up to 30 days prior to the
scheduled shipment date, without significant penalty. Some of the Company's
customers have in the past built, and may in the future build, significant
inventory in order to facilitate more rapid deployment of anticipated major
projects or for other reasons. Decisions by such customers to reduce their
inventory levels could lead to reductions in purchases from the Company in
certain periods. These reductions, in turn, could cause fluctuations in the
Company's operating results and could have an adverse effect on the Company's
business, financial condition and results of operations in the periods in which
the inventory is reduced.

                                       27
<PAGE>

Operating results may also fluctuate due to a variety of factors, including
market acceptance of the Company's new lines of products, delays in new product
introductions by the Company, market acceptance of new products and feature
enhancements introduced by the Company, changes in the mix of products and or
customers, the gain or loss of a significant customer, competitive price
pressures, changes in expenses related to operations, research and development
and marketing associated with existing and new products, and the general
condition of the economy.

All of the above factors are difficult for the Company to forecast, and these or
other factors can materially and adversely affect the Company's business,
financial condition and results of operations for one quarter or a series of
quarters. The Company's expense levels are based in part on its expectations
regarding future sales and are fixed in the short term to a certain extent.
Therefore, the Company may be unable to adjust spending in a timely manner to
compensate for any unexpected shortfall in sales. Any significant decline in
demand relative to the Company's expectations or any material delay of customer
orders could have a material adverse effect on the Company's business, financial
condition, and results of operations. There can be no assurance that the Company
will be able to achieve or sustain profitability on a quarterly or annual basis.
In addition, the Company has had, and in some future quarter may have operating
results below the expectations of public market analysts and investors. In such
event, the price of the Company's Common Stock would likely be materially and
adversely affected. See "Potential Volatility of Stock Price".

     Competition. The market for telecommunications network access equipment
addressed by the Company's products can be characterized as highly competitive,
with intensive equipment price pressure. This market is subject to rapid
technological change, wide-ranging regulatory requirements, the entrance of low
cost manufacturers and the presence of formidable competitors that have greater
name recognition and financial resources. Certain technology such as the V.34
and DSU/CSU portion of the SpectraComm and InnovX lines are not considered new
and the market has experienced decline in recent years.

Industry consolidation could lead to competition with fewer, but stronger
competitors. In addition, advanced termination products are emerging, which
represent both new market opportunities, as well as a threat to the Company's
current products. Furthermore, basic line termination functions are increasingly
being integrated by competitors, such as Cisco, Lucent Technologies, Inc. and
Nortel Networks, into other equipment such as routers and switches. To the
extent that current or potential competitors can expand their current offerings
to include products that have functionality similar to the Company's products
and planned products, the Company's business, financial condition and results of
operations could be materially adversely affected. Many of the Company's current
and potential competitors have substantially greater technical, financial,
manufacturing and marketing resources than the Company. In addition, many of the
Company's competitors have long-established relationships with network service
providers and enterprises. There can be no assurance that the Company will have
the financial resources, technical expertise, manufacturing, marketing,
distribution and support capabilities to compete successfully in the future.

     Rapid Technological Change. The network access and telecommunications
equipment markets in general are characterized by rapidly changing technologies
and frequent new product introductions. The rapid development of new
technologies increases the risk that current or new competitors could develop
products that would reduce the competitiveness of the Company's products. The
Company's success will depend to a substantial degree upon its ability to
respond to changes in technology and customer requirements. This will require
the timely selection, development and marketing of new products and enhancements
on a cost-effective basis. The development of new, technologically advanced
products is a complex and uncertain process, requiring high levels of
innovation. The Company may need to supplement its internal expertise and
resources with specialized expertise or intellectual property from third parties
to develop new products.

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<PAGE>

Furthermore, the communications industry is characterized by the need to design
products that meet industry standards for safety, emissions and network
interconnection. With new and emerging technologies and service offerings from
network service providers, such standards are often changing or unavailable. As
a result, there is a potential for product development delays due to the need
for compliance with new or modified standards. The introduction of new and
enhanced products also requires that the Company manage transitions from older
products in order to minimize disruptions in customer orders, avoid excess
inventory of old products and ensure that adequate supplies of new products can
be delivered to meet customer orders. There can be no assurance that the Company
will be successful in developing, introducing or managing the transition to new
or enhanced products, or that any such products will be responsive to
technological changes or will gain market acceptance. The Company's business,
financial condition and results of operations would be materially adversely
affected if the Company were to be unsuccessful, or to incur significant delays
in developing and introducing such new products or enhancements. See "Dependence
on Legacy and Recently Introduced Products and New Product Development".

     Compliance with Regulations and Evolving Industry Standards. The market for
the Company's products is characterized by the need to meet a significant number
of communications regulations and standards, some of which are evolving as new
technologies are deployed. In the United States, the Company's products must
comply with various regulations defined by the Federal Communications Commission
and standards established by Underwriters Laboratories and Bell Communications
Research and new products introduced in the SpectraComm line and other products
designed for telecommunication carrier networks will need to be NEBS Certified.
As standards continue to evolve, the Company will be required to modify its
products or develop and support new versions of its products. The failure of the
Company's products to comply, or delays in compliance, with the various existing
and evolving industry standards, could delay introduction of the Company's
products, which could have a material adverse effect on the Company's business,
financial condition and results of operations.

     GDC May Require Additional Funding to Sustain Operations. The Company
emerged from Chapter 11 bankruptcy on September 15, 2003. Under the plan of
emergence, the Company plans to pay all creditors 100% of their allowed claims
based upon a five year business plan. The ability to meet the objectives of this
business plan is directly affected by the factors described in this section
"Risk Factors". The Company cannot assure investors that it will be able to
obtain new customers or to generate the increased revenues required to meet our
business plan objectives. In addition, in order to execute the business plan,
the Company may need to seek additional funding through public or private equity
offerings, debt financings or commercial partners. The Company cannot assure
investors that it will obtain funding on acceptable terms, if at all. If the
Company is unable to generate sufficient revenues or access capital on
acceptable terms, it may be required to (a) obtain funds on unfavorable terms
that may require the Company to relinquish rights to certain of our technologies
or that would significantly dilute our stockholders and/or (b) significantly
scale back current operations. Either of these two possibilities would have a
material adverse effect on the Company's business, financial condition and
results of operations.

     Risks Associated With Entry into International Markets. The Company has had
limited direct sales to customers outside of North America since 2001. The
Company has little recent experience in international markets with the exception
of a few direct customers and resellers/integrators. With the exception of sales
into Western Europe through a subsidiary in France, Ahead Communication Systems,
Inc., which was acquired by the Company on June 30, 2005, also has limited
international sales experience. The Company intends to expand sales of its
products outside of North America and to enter certain international markets,
which will require significant management attention and financial resources.
Conducting business outside of North America is subject to certain risks,
including longer payment cycles, unexpected changes in regulatory requirements
and tariffs, difficulties in supporting foreign customers, greater difficulty in
accounts receivable collection and potentially adverse tax consequences. To the
extent any Company sales are denominated in foreign currency, the Company's

                                       29
<PAGE>

sales and results of operations may also be directly affected by fluctuations in
foreign currency exchange rates. In order to sell its products internationally,
the Company must meet standards established by telecommunications authorities in
various countries, as well as recommendations of the Consultative Committee on
International Telegraph and Telephony. A delay in obtaining, or the failure to
obtain, certification of its products in countries outside the United States
could delay or preclude the Company's marketing and sales efforts in such
countries, which could have a material adverse effect on the Company's business,
financial condition and results of operations.

     Risk of Third Party Claims of Infringement. The network access, private
enterprise and telecommunications equipment industries in general are
characterized by the existence of a large number of patents and frequent
litigation based on allegations of patent infringement. From time to time, third
parties may assert exclusive patent, copyright, trademark and other intellectual
property rights to technologies that are important to the Company. The Company
has not conducted a formal patent search relating to the technology used in its
products, due in part to the high cost and limited benefits of a formal search.
In addition, since patent applications in the United States are not publicly
disclosed until the related patent is issued and foreign patent applications
generally are not publicly disclosed for at least a portion of the time that
they are pending, applications may have been filed which, if issued as patents,
could relate to the Company's products. Software comprises a substantial portion
of the technology in the Company's products. The scope of protection accorded to
patents covering software-related inventions is evolving and is subject to a
degree of uncertainty which may increase the risk and cost to the Company if the
Company discovers third party patents related to its software products or if
such patents are asserted against the Company in the future.

The Company may receive communications from third parties asserting that the
Company's products infringe or may infringe the proprietary rights of third
parties. In its distribution agreements, the Company typically agrees to
indemnify its customers for any expenses or liabilities resulting from claimed
infringements of patents, trademarks or copyrights of third parties. In the
event of litigation to determine the validity of any third-party claims, such
litigation, whether or not determined in favor of the Company, could result in
significant expense to the Company and divert the efforts of the Company's
technical and management personnel from productive tasks. In the event of an
adverse ruling in such litigation, the Company might be required to discontinue
the use and sale of infringing products, expend significant resources to develop
non-infringing technology or obtain licenses from third parties. There can be no
assurance that licenses from third parties would be available on acceptable
terms, if at all. In the event of a successful claim against the Company and the
failure of the Company to develop or license a substitute technology, the
Company's business, financial condition, and results of operations could be
materially adversely affected.

     Limited Protection of Intellectual Property. The Company relies upon a
combination of patent, trade secret, copyright, and trademark laws and
contractual restrictions to establish and protect proprietary rights in its
products and technologies. The Company has been issued certain U.S. and Canadian
patents with respect to certain products. There can be no assurance that third
parties have not or will not develop equivalent technologies or products without
infringing the Company's patents or that a court having jurisdiction over a
dispute involving such patents would hold the Company's patents valid,
enforceable and infringed. The Company also typically enters into
confidentiality and invention assignment agreements with its employees and
independent contractors, and non-disclosure agreements with its suppliers,
distributors and appropriate customers so as to limit access to and disclosure
of its proprietary information. There can be no assurance that these statutory
and contractual arrangements will deter misappropriation of the Company's
technologies or discourage independent third-party development of similar
technologies. In the event such arrangements are insufficient, the Company's
business, financial condition and results of operations could be materially
adversely affected. The laws of certain foreign countries in which the Company's

                                       30
<PAGE>

products are or may be developed, manufactured or sold may not protect the
Company's products or intellectual property rights to the same extent as do the
laws of the United States and thus, make the possibility of misappropriation of
the Company's technology and products more likely.

     Potential Volatility of Stock Price. The trading price of the Company's
Common Stock may be subject to wide fluctuations in response to
quarter-to-quarter variations in operating results, announcements of
technological innovations or new products by the Company or its competitors,
developments with respect to patents or proprietary rights, general conditions
in the telecommunication network access and equipment industries, changes in
earnings estimates by analysts, or other events or factors. In addition, the
stock market has experienced extreme price and volume fluctuations, which have
particularly affected the market prices of many technology companies and which
have often been unrelated to the operating performance of such companies.
Company-specific factors or broad market fluctuations may materially adversely
affect the market price of the Company's Common Stock. The Company has
experienced significant fluctuations in its stock price and share trading volume
in the past and may continue to do so.

     The Company is Controlled by a Small Number of Stockholders and Certain
Creditors. In particular, Mr. Modlin, Chairman of the Board and Chief Executive
Officer, and President of Weisman Celler Spett & Modlin, P.C., legal counsel for
the Company, owns approximately 69% of the Company's outstanding shares of Class
B stock. Furthermore, Mr. Modlin is also executor of the estate of Mr. Charles
P. Johnson, the former Chairman of the Board and Chief Executive Officer, and
such estate owns approximately 27% of the outstanding shares of Class B stock.
Class B stock under certain circumstances has 10 votes per share in the election
of Directors. The Board of Directors is to consist of no less than three and no
more than thirteen directors, one of which was designated by the Creditors
Committee (and thereafter may be designated by the Trustee). The holders of the
9% Preferred Stock are presently entitled to designate two directors until all
arrears on the dividends on such 9% Preferred Stock are paid in full. In
addition, until the Company's primary secured loan obligations are paid in full,
the primary secured lender, Ableco Finance LLC ("Ableco") is entitled to
designate three directors and, upon default in its loan, its affiliate shall
have the right under the two warrants it holds, to (i) acquire from 5% to 51%
(currently 20%) of the outstanding Common Stock depending on the amount of the
outstanding secured debt at such time, and (ii) acquire 10% of the outstanding
Common Stock on a diluted basis. If Ableco's loan is not repaid in full by
September 15, 2006, the Trustee may designate two more directors, and in the
event of a payment default under the Debentures which is not cured within 60
days after written notice, the Trustee shall be entitled to select a majority of
the Board of Directors. Accordingly, in the absence of a default under Ableco's
loan, or a payment default under the Debentures, Mr. Modlin may be able to elect
all members of the Board of Directors not designated by the holders of the 9%
Preferred Stock, Ableco and the Trustee and determine the outcome of certain
corporate actions requiring stockholder approval, such as mergers and
acquisitions of the Company. This level of ownership by such persons and
entities could have the effect of making it more difficult for a third party to
acquire, or of discouraging a third party from attempting to acquire, control of
the Company. Such provisions could limit the price that certain investors might
be willing to pay in the future for shares of the Company's Common Stock,
thereby making it less likely that a stockholder will receive a premium in any
sale of shares. To date, the holders of the 9% Preferred Stock and Ableco have
not designated any directors.

ITEM 3.  CONTROLS AND PROCEDURES

For the period covered by this report, the Company carried out an evaluation,
under the supervision and with the participation of the Company's management,
including the Company's President and Chief Executive Officer, and Vice
President and Chief Financial Officer, of the effectiveness of the design and
operation of the Company's disclosure controls and procedures pursuant to
Exchange Act Rule 13a-15. Based upon that evaluation, the Company's President
and Chief Executive Officer, and Vice President and Chief Financial Officer,
have concluded that the Company's disclosure controls and procedures are

                                       31
<PAGE>

effective to ensure the information required to be disclosed in reports filed or
submitted under the Securities Exchange Act of 1934 is recorded, processed,
summarized and reported within the time periods specified in Securities and
Exchange Commission rules and forms. Changes in internal controls over financial
reporting occurred during the period covered by this Quarterly Report on Form
10-QSB. As a result of the acquisition of Ahead Communications Systems, Inc.
("ACS") on June 30, 2005, the Company's management has concluded that there are
inadequate controls over ACS financial reporting. The Company's internal control
over financial reporting as to the ACS segment may be materially affected until
remedied, which implementation of controls is planned to occur in the quarter
ended September 30, 2005.


                           PART II. OTHER INFORMATION


ITEM 1.  LEGAL PROCEEDINGS

Not applicable

ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Not applicable

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

Payment of dividends on the 9% Cumulative Convertible Exchangeable Preferred
Stock were suspended June 30, 2000. Such dividend arrearages total $8,863,875 as
of June 30, 2005.

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

Not applicable

ITEM 5.  OTHER INFORMATION

Reference is made to Note 7, "2005 Stock and Bonus Plan" included in Notes to
Condensed Consolidated Financial Statements in Item 1 of this Form 10-QSB for a
description of the new 2005 Stock and Bonus Plan adopted January 26, 2005 and
previously filed as an exhibit.

ITEM 6.  EXHIBITS

(a)  Exhibits Index:

Exhibit Number    Description of Exhibit
--------------    ----------------------

31.1              Certification of Chief Executive Officer pursuant to Rule
                  13a-14(a) or Rule 15d-14(a) under the Securities Exchange Act
                  of 1934

31.2              Certification of Chief Financial Officer pursuant to Rule
                  13a-14(a) or Rule 15d-14(a) under the Securities Exchange Act
                  of 1934

32.1              Certification of Chief Executive Officer and Chief Financial
                  Officer pursuant to 18 U.S.C. Section 1350, as adopted
                  pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

                                       32
<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.


August 15, 2005                       /s/ WILLIAM G. HENRY
---------------                       ------------------------------------------
                                      William G. Henry
                                      Vice President, Finance and Administration
                                      Chief Financial Officer

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