<PAGE>
 
                    U.S. SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C.  20549

                                  FORM 10-QSB

(Mark One)

     [x]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
          OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 1998

     [_]  TRANSITION REPORT PURSUANT TO SECTION 13
          OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______________ to _______________


Commission File Number 0-21635

                        Global Diamond Resources, Inc.
--------------------------------------------------------------------------------
       (Exact name of small business issuer as specified in its charter)

             Nevada                                 33-0213535
------------------------------------            ------------------
(State or other jurisdiction                    (IRS Employer
of incorporation or organization)               Identification No.)

          836 Prospect Street, Suite 2B, La Jolla, California  92037
--------------------------------------------------------------------------------
                   (Address of principal executive offices)

                                (619) 459-1928
                        ------------------------------
                          (Issuer's telephone number)


                                Not Applicable
-------------------------------------------------------------------------------
(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 of 1934 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 [_]

     As of April 21, 1998, the Company had 24,075,890 shares of its $.0005 par
value common stock issued and outstanding.
<PAGE>
 
                        PART 1 - FINANCIAL INFORMATION

                                                                            PAGE
                                                                            ----
ITEM 1.   Financial Statements

Condensed Consolidated Balance Sheets at March 31, 1998 (unaudited) and 
 December 31, 1997.........................................................    2
Unaudited Condensed Consolidated Statements of Operations for the three 
 month periods ended March 31, 1998 and 1997...............................    3
Unaudited Condensed Consolidated Statements of Cash Flows for the three 
 month periods ended March 31, 1998 and 1997...............................    4
Notes to Condensed Consolidated Financial Statements.......................    5

                                      -1-
<PAGE>
 
                GLOBAL DIAMOND RESOURCES, INC. AND SUBSIDIARIES

                     Condensed Consolidated Balance Sheets

                      March 31, 1998 and December 31, 1997

<TABLE>
<CAPTION>
                             Assets                     1998           1997    
                                                   -------------   ----------- 
                                                    (Unaudited)                
<S>                                                 <C>             <C>        
Current assets:                                                                
  Cash and cash equivalents                         $  1,401,037     4,096,141 
  Accounts receivable                                    298,303        99,998 
                                                    ------------    ---------- 
                                                       1,699,340     4,196,139 
                                                                               
Fixed assets, net                                      3,933,669     1,856,880 
                                                    ------------    ---------- 
                                                    $  5,633,009     6,053,019 
                                                    ============    ========== 
                                                                               
                            Liabilities                                        
                                                                               
Current liabilities:                                                           
  Accounts payable, accrued liabilities                                        
    and current portion of long-term debt           $    413,267       301,390 
                                                    ------------    ---------- 
  Long-term debt, less current portion                 1,600,000     1,662,500 
                                                    ------------    ---------- 
                                                                               
                       Stockholders' Equity                                    
                                                                               
Stockholders' equity:                                                          
  Preferred stock, $0.001 par value, 10,000,000                                
   shares authorized, no shares issued                        --            -- 
  Common stock, $.0005 par value, 50,000,000                                   
   shares authorized, 24,075,890 and 23,903,604                                
   shares issued and outstanding, respectively            12,038        11,952 
  Additional paid-in capital                           7,001,448     6,955,639 
  Accumulated deficit                                 (3,259,748)   (2,837,791)
  Accumulated other comprehensive income                                       
    Foreign currency translation adjustment             (133,996)      (40,671)
                                                    ------------    ---------- 
                                                       3,619,742     4,089,129 
                                                    ------------    ---------- 
                                                    $  5,633,009     6,053,019 
                                                    ============    ========== 
</TABLE>
See accompanying notes to condensed consolidated financial statements.

                                      -2-
<PAGE>
 
                GLOBAL DIAMOND RESOURCES, INC. AND SUBSIDIARIES

                Condensed Consolidated Statements of Operations

           For the three month periods ended March 31, 1998 and 1997
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                        1998           1997
                                                   --------------  ------------ 
<S>                                                <C>             <C>
Other income:
  Interest income                                  $       40,191         1,653
                                                   --------------  ------------
 
 Expenses:
  Depreciation                                             43,048         2,572
  Interest                                                 60,000            --
  Legal and accounting                                     58,451        47,885
  Office and miscellaneous                                100,832        28,373
  Salaries and benefits                                   131,142        50,715
  Travel                                                   67,875        10,686
                                                   --------------  ------------
                                                          461,348       140,231
 
Operating loss                                           (421,157)     (138,578)
Income taxes                                                  800           800
                                                   --------------  ------------
    Net loss                                             (421,957)     (139,378)
    Other comprehensive income
      Foreign currency translation adjustment             (93,325)        5,687
                                                   --------------  ------------
    Comprehensive loss                             $     (515,282)     (133,691)
                                                   ==============  ============
    Basic and diluted net loss per share           $        (0.02)        (0.01)
                                                   ==============  ============
 
    Weighted average shares outstanding                23,932,318    11,000,108
                                                   ==============  ============
</TABLE>

See accompanying notes to condensed consolidated financial statements.

                                      -3-
<PAGE>
 
                GLOBAL DIAMOND RESOURCES, INC. AND SUBSIDIARIES

                Condensed Consolidated Statements of Cash Flows

           For the three month periods ended March 31, 1998 and 1997
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                        1998          1997   
                                                    -----------     --------- 
<S>                                                 <C>             <C>      
Cash flows from operating activities:                                       
  Net loss                                          $   (421,957)   (139,378)
  Adjustments to reconcile net loss to net                                   
    cash used in operating activities:                                       
    Depreciation                                         43,048       2,572  
    (Increase) in accounts receivable                  (198,305)    (30,635) 
    Increase in accounts payable,                                            
      accrued liabilities and current portion                                
      of long-term debt                                  99,377      18,122  
                                                    -----------    -------- 
                                                                             
      Net cash used in operating activities            (477,837)   (149,319) 
                                                    -----------    -------- 
                                                                             
Cash flows from investing activities:                                        
  Purchase of equipment                                 (14,030)     (1,593) 
  Mining properties and equipment                    (2,105,807)   (100,151) 
                                                    -----------    -------- 
                                                                             
    Net cash used in investing activities            (2,119,837)   (101,744) 
                                                    -----------    -------- 
                                                                             
Cash flows from financing activities:                                        
  Proceeds from exercise of common stock warrants        45,895          --  
  Repayment of long-term debt                           (50,000)         --  
                                                    -----------    -------- 
                                                                             
    Net cash used in financing activities                (4,105)         --
                                                    -----------    -------- 
                                                                             
Effects of exchange rates on cash                       (93,325)      5,687  
                                                    -----------    -------- 
                                                                             
Net decrease in cash and cash equivalents            (2,695,104)   (245,376) 
                                                                             
Cash and cash equivalents, beginning of period        4,096,141     334,387  
                                                    -----------    -------- 
                                                                             
Cash and cash equivalents, end of period            $ 1,401,037      89,011  
                                                    ===========    ========
</TABLE>

See accompanying notes to condensed consolidated financial statements.

                                      -4-
<PAGE>
 
                GLOBAL DIAMOND RESOURCES, INC. AND SUBSIDIARIES

              Notes to Condensed Consolidated Financial Statements

                   As of March 31, 1998 and December 31, 1997

     (1)  These condensed consolidated financial statements of Global Diamond
          Resources, Inc. (the "Company") do not include all of the information
          and footnotes required by generally accepted accounting principles for
          complete financial statements and should be read in conjunction with
          the financial statements and notes thereto included in the Company's
          Annual Report on Form 10-KSB.  In the opinion of management, the
          financial information set forth in the accompanying condensed
          consolidated financial statements reflect all adjustments necessary
          for a fair statement of the periods reported, and all such adjustments
          were of a normal and recurring nature.  Interim results are not
          necessarily indicative of results for a full year.

     (2)  Caerwinning Deposit Mineral Lease

          The Company received government approval of the Caerwinning Deposit
          mineral lease on March 31, 1998.  Upon receipt of this approval, the
          Company became eligible to borrow an additional $1,400,000 on its 15%
          Secured Note Payable.  The Company received the funds on April 6,
          1998.

     (3)  Fixed Assets
<TABLE>
<CAPTION>
                                              March  31,      December 31,
                                                 1998            1997
                                             -----------      ------------ 
<S>                                          <C>              <C> 
          Mining properties under
           development:
            Grasdrif deposit                     916,858         819,724
            Caerwinning deposit              $   611,534         374,403
            Montrose deposit                      44,149              --
                                             -----------       --------- 
 
                                               1,572,541       1,194,127
                                             -----------       --------- 
 
          Mining equipment, at cost            2,405,432         678,039
           Less accumulated depreciation         (72,349)        (31,932)
                                             -----------       --------- 
 
                                               2,333,083         646,107
                                             -----------       ---------  

          Office equipment, at cost               51,633          37,603
           Less accumulated depreciation         (23,588)        (20,957)
                                             -----------       --------- 
 
                                                  28,045          16,646
                                             -----------       --------- 
 
                                             $ 3,933,669       1,856,880
                                             ===========       =========
</TABLE>

     (4)  During March 1998, warrant holders exercised warrants to purchase
          172,286 common shares of the Company at an exercise price of Cdn$.375
          per share, resulting in proceeds of $45,895.

                                      -5-
<PAGE>
 
ITEM 2.   Management's Discussion and Analysis or Plan of Operation

     The Company is engaged in diamond exploration and mining.  The Company has
acquired two mining properties (the Grasdrif Deposit and the Caerwinning
Deposit) and has acquired an option to purchase a third mining property (the
Montrose Kimberlite Pipe), all of which are located in the Republic of South
Africa.  The Company intends to conduct exploration and acquisitions of
additional diamond pipes and alluvial deposits and is continuously evaluating
potential property acquisitions.

     To date, the Company's activities have included the investigation and
acquisition of mining property interests, purchase of mining plant and equipment
and exploratory work and site establishment.  During the quarter ended March 31,
1998 the Company purchased mining plant and equipment for and incurred site
establishment costs at the Grasdrif Deposit in the amount of $1,824,527.  In
addition, the Caerwinning mineral lease was purchased for $226,348 and an
extensive drilling program at the Montrose Deposit commenced in March 1998.  The
increase in interest income is mainly due to the investing of cash received from
the debt and equity financing in December 1997.  The interest expense in 1998 is
on the debt portion of that financing.  The increase in other expenses is mainly
due to the Company gearing up to place the Grasdrif and Caerwinning Deposits
into production.  During March 1998, warrant holders exercised warrants to
purchase 172,286 common shares of the Company at an exercise price of Cdn$.375
per share, resulting in proceeds of $45,895.  The Company received government
approval of the Caerwinning Deposit mineral lease on March 31, 1998.  Upon
receipt of this approval, the Company became eligible to borrow an additional
$1,400,000 on its 15% Secured Note Payable.  The Company received the funds on
April 6, 1998.  The Company has financed its activities to date through the sale
of its equity and debt securities.  The Company's plan of operations for the
next 12 months include the completion of exploratory work at the Montrose
Deposit and site establishment and the commencement of full scale mining
operations at the Grasdrif and Caerwinning Deposits.  The Company expects to be
in full scale mining operations on both deposits by the end of June 1998.

     The Company believes that it has sufficient working capital to satisfy its
working capital requirements for the next 12 months, including the capital
required to commence full scale operations at two of its mining properties, the
Grasdrif and Caerwinning Deposits.  The Company's beliefs concerning the
sufficiency of its working capital are based on certain assumptions concerning,
among other things, the estimated grade of the processed ore, average price per
diamond carat and cost of production.  If any of these assumptions prove
incorrect, the Company may require additional capital.  Any such additional
financing may require a pledge or mortgage of the Company's properties and of
any production therefrom.  There is, of course, no assurance that satisfactory
financing, if necessary, could be obtained therefor.  In addition to borrowings
to finance individual development projects, the Company may also borrow funds
from time to time for working capital and other general corporate purposes.

     In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 131, "Disclosures about Segments of an
Enterprise and Related Information" ("SFAS 131").  SFAS 131 established
standards regarding how public companies report information about operating
segments in annual financial statements and requires that selected information
about operating segments be reported in interim financial reports to
stockholders.  This statement is effective for fiscal years beginning after
December 15, 1997.  In the initial year of adoption, comparative information for
earlier years must be restated.  The Company does not expect that this statement
will have a significant impact on the Company's financial statement disclosures
for the year ending December 31, 1998.

     This report contains various forward-looking statements that are based on
the Company's beliefs as well as assumptions made by and information currently
available to the Company.  When used in this report, the words "believe,"
"expect," "anticipate," "estimate" and similar expressions are intended to
identify forward-looking statements.  Such statements are subject to certain
risks, uncertainties and assumptions, including, without limitation, that as of
this date the Company has not commenced mining operations at any of its three
mines; the lack of proven reserves at any of the Company's three mines; mining
risks generally; political risks associated with the Company's operations in the
Republic of South Africa; general economic conditions; currency fluctuations;
and estimates of costs of production.  Should one or more of these risks or
uncertainties materialize, or should underlying assumptions prove incorrect,
actual results may vary materially from those anticipated, estimated, or
projected.  The Company cautions potential investors not to place undue reliance
on any such forward-looking statements all of which speak only as of the date
made.

                                      -6-
<PAGE>
 
PART II - OTHER INFORMATION

Item 1.  Legal Proceedings.
         ----------------- 

          Inapplicable.

Item 2.  Changes in Securities.
         --------------------- 

          Inapplicable.

Item 3.  Defaults Upon Senior Securities.
         ------------------------------- 

          Inapplicable.

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

          Inapplicable.

Item 5.  Other Information.
         ----------------- 

          Inapplicable.

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

          (a)  Exhibits
               --------

               Exhibit 27.1  Financial Data Schedule

          (b)  Reports on Form 8-K
               -------------------

               Inapplicable.

                                      -7-
<PAGE>
 
                                   SIGNATURES


     In accordance with the requirements of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                                    Global Diamond Resources, Inc.
                                    (Registrant)


Dated:  April 22, 1998              By:  /s/ MERVYN J. McCULLOCH
                                       -----------------------------
                                             Mervyn J. McCulloch,
                                             Chief Financial Officer

                                      -8-