===============================================================
                   SECURITIES AND EXCHANGE COMMISSION
                         Washington, D.C. 20549

                                FORM 10-Q


            Quarterly Report Pursuant to Section 13 or 15(d)
                 of the Securities Exchange Act of 1934

              For the quarterly period ended March 31, 2002

                     Commission File Number: 0-21683

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

                           GraphOn Corporation
         (Exact name of Registrant as specified in its charter)

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


              Delaware                           13-3899021
  (State or other jurisdiction of               (IRS Employer
   incorporation or organization)            Identification No.)


                 11711 South East 8th Street, Suite 215
                           Bellevue, WA 98005
                (Address of principal executive offices)

              Registrant's telephone number: (425) 818-1400

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

      Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]

      As of May 10, 2002 there were issued and outstanding 17,528,720 shares of
the Registrant's Common Stock, par value $0.0001.

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

<PAGE>


                           GRAPHON CORPORATION

                                FORM 10-Q

                            Table of Contents



                                                                    Page

      PART I.

      Item 1.  Financial Statements
                 Condensed Balance Sheets                              2
                 Condensed Statements of Operations                    3
                 Condensed Statements of Cash Flows                    4
                 Notes to Condensed Financial Statements               5

      Item 2.  Management's Discussion and Analysis of Financial
               Condition and Results of Operations                     7

      Item 3.  Quantitative and Qualitative Disclosures About
               Market Risk                                            15

      PART II.

      Item 2.  Changes in Securities and Use of Proceeds              16

      Item 6.  Exhibits and Reports on Form 8-K                       16

      Signatures                                                      17



<PAGE>
<TABLE>
<CAPTION>

                PART I--FINANCIAL INFORMATION

                 ITEM I Financial Statements


                     GRAPHON CORPORATION
                  CONDENSED BALANCE SHEETS

                                                      March 31, December 31,
                                                        2002        2001
     ASSETS                                        ------------ -----------
  ------------                                       (Unaudited)
Current Assets:
<S>                                                <C>          <C>
  Cash and cash equivalents .................      $  2,461,000 $ 3,952,600
  Available-for-sale securities .............         2,532,500   3,008,000
  Accounts receivable, net of allowance for
   doubtful accounts of $250,000 and $350,000           504,000     620,400
  Prepaid expenses and other current assets .           164,800     251,300
                                                   ------------ -----------
  Total Current Assets ......................         5,662,300   7,832,300
                                                   ------------ -----------

Purchased technology, net ...................         2,803,400   3,132,400
Other assets ................................         1,326,900   2,021,100
                                                   ------------ -----------
   TOTAL ASSETS .............................      $  9,792,600 $12,985,800
                                                   ============ ===========
   LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
  Accounts payable ..........................      $    284,900 $   319,900
  Other current liabilities .................         1,113,800     762,100
  Deferred Revenue ..........................           566,500     577,800
                                                   ------------ -----------
  Total Current Liabilities .................         1,965,200   1,659,800
                                                   ------------ -----------
Stockholders' Equity
Preferred stock, $0.01 par value, 5,000,000 shares
 authorized, no shares issued and outstanding                 -           -
Common stock, $0.0001 par value, 45,000,000
 shares authorized, 17,500,052 and 17,226,004
 shares issued and outstanding                            1,900       1,700
Additional paid in capital                           45,981,300  45,925,900
Deferred compensation                                   (99,600)   (193,800)
Notes receivable                                        (50,000)          -
Accumulated other comprehensive income                   (6,400)      1,500
Accumulated deficit                                 (37,999,800)(34,409,300)
                                                   ------------ -----------
Total Stockholders' Equity                            7,827,400  11,326,000
                                                   ------------ -----------
   TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY      $  9,792,600 $12,985,800
                                                   ============ ===========
<FN>

  See accompanying notes to condensed financial statements.
</FN>
</TABLE>


                                       2
<PAGE>

<TABLE>
<CAPTION>


                               GRAPHON CORPORATION
                       CONDENSED STATEMENTS OF OPERATIONS

                                                   Three Months Ended
                                                        March 31,
                                                   ------------------
                                                  2002            2001
                                             ------------    ------------
                                              (Unaudited)     (Unaudited)

<S>                                          <C>             <C>
Revenue ..................................   $    585,700    $  2,320,600

Cost of revenue ..........................        454,600         382,000
                                             ------------    ------------
  Gross Profit ...........................        131,100       1,938,600
                                             ------------    ------------
Operating Expenses:
Selling and marketing ....................        808,800       1,425,500
General and administrative ...............        643,700       1,507,200
Research and development .................        812,800       1,353,200
Restructuring charge .....................      1,490,400            --
                                             ------------    ------------
Total Operating Expenses .................      3,755,700       4,285,900
                                             ------------    ------------
Loss From Operations .....................     (3,624,600)     (2,347,300)
Other Income (Expense):
  Other income (expense), net ............         34,100         190,100
  Loss on joint venture ..................           --           (13,600)
                                             ------------    ------------
  Total Other Income .....................         34,100         176,500
                                             ------------    ------------
Loss Before Provision for Income Taxes ...     (3,590,500)     (2,170,800)
Provision for Income Taxes ...............           --              --
                                             ------------    ------------
Net Loss .................................   $ (3,590,500)   $ (2,170,800)
                                             ------------    ------------
Basic and Diluted Loss per Common Share ..   $      (0.21)   $      (0.15)
                                             ============    ============
Weighted Average Common Shares Outstanding     17,353,663      14,706,108
                                             ============    ============
<FN>

        See accompanying notes to condensed financial statements.
</FN>
</TABLE>

                                       3
<PAGE>

<TABLE>
<CAPTION>


                        GRAPHON CORPORATION
                CONDENSED STATEMENTS OF CASH FLOWS

                                                              Three Months Ended
                                                                   March 31,
                                                              -----------------
                                                             2002           2001
                                                         -----------    -----------
                                                          (Unaudited)    (Unaudited)

Cash Flows From Operating Activities:
<S>                                                      <C>            <C>
Net loss .............................................   $(3,590,500)   $(2,170,800)
Adjustments to reconcile net loss to net cash
used in operating activities:
  Depreciation and amortization ......................       526,700        486,800
  Restructuring charge ...............................       559,800           --
  Amortization of deferred compensation ..............        94,200        366,600
  Provision for doubtful accounts ....................      (100,000)          --
  Loss on joint venture - related party ..............          --           13,600
Changes in operating assets and liabilities:
  Accounts receivable ................................       216,400     (1,348,800)
  Prepaid expenses and other assets ..................        86,500         75,400
  Accounts payable ...................................       (35,000)       107,500
  Accrued expenses ...................................       378,300        (26,100)
  Deferred revenue ...................................       (11,300)        22,600
                                                         -----------    -----------
Net Cash Used In Operating Activities ................    (1,874,900)    (2,473,200)
                                                         -----------    -----------
Cash Flows From Investing Activities:
Purchase of available-for-sale securities ............      (510,400)      (809,000)
Proceeds from sale of available-for-sale securities ..       978,700      2,035,000
Capital expenditures .................................       (63,300)      (114,000)
Other assets .........................................             -        (53,900)
Investment in joint venture - related party ..........             -        (44,200)
                                                         -----------    -----------
  Net Cash Provided By Investing Activities ..........       405,000      1,013,900
                                                         -----------    -----------
Cash Flows From Financing Activities:
Repayment of note payable ............................       (26,600)       (66,900)
Net proceeds from issuance of common stock ...........         5,400        110,100
                                                         -----------    -----------
   Net Cash (Used In) Provided By Financing Activities       (21,200)        43,200
                                                         -----------    -----------
Effect of exchange rate fluctuations on cash and
  cash equivalents ...................................          (500)          (600)
                                                         -----------    -----------
Net Decrease in Cash and Cash Equivalents ............    (1,491,600)    (1,416,700)

Cash and Cash Equivalents, beginning of period .......     3,952,600      8,200,100
                                                         -----------    -----------
Cash and Cash Equivalents, end of period .............   $ 2,461,000    $ 6,783,400
                                                         ===========    ===========

Supplemental Disclosure of Cash Flow Information:
Cash paid for interest expense .......................   $       200    $     3,200

Noncash Investing and Financing Activities:
Notes receivable issued for purchase of common stock .   $    50,000    $         -
<FN>

  See accompanying notes to condensed financial statements.
</FN>
</TABLE>

                                       4
<PAGE>

                           GRAPHON CORPORATION
                 NOTES TO CONDENSED FINANCIAL STATEMENTS


1. Basis of Presentation

   The unaudited condensed financial statements of GraphOn Corporation (the
Company) included herein have been prepared in accordance with the instructions
for Form 10-Q and, therefore, do not include all information and footnotes
necessary for a complete presentation of the Company's results of operations,
financial position and cash flows.

   The unaudited condensed financial statements included herein reflect all
adjustments (which include only normal, recurring adjustments, except for the
restructuring charge, as described below) that are, in the opinion of
management, necessary to state fairly the results for the periods presented.
This Quarterly Report on Form 10-Q should be read in conjunction with the
Company's audited financial statements contained in the Company's Annual Report
on Form 10-K for the year ended December 31, 2001, which was filed with the
Securities and Exchange Commission (the Commission) on March 29, 2002. The
interim results presented herein are not necessarily indicative of the results
of operations that may be expected for the full fiscal year ending December 31,
2002, or any future period.

   The Company's financial statements have been presented on a going concern
basis, which contemplates the realization of assets and liabilities in the
normal course of business. The Company continues to develop its Windows-based
product line, particularly its Windows enterprise edition, GG:XP, as it strives
to further penetrate the Windows market. The Company anticipates incurring
further development costs for GG:XP until it is ready for distribution,
currently expected to be towards the end of the third quarter of 2002.
Management expects to fund this development through working capital and cash
flow from operations. However, until revenues derived from the UNIX products,
which have temporarily become the concentration of the Company's sales and
marketing efforts, and from currently existing Windows customers are sufficient
enough to generate positive cash flows from operations, the Company will
continue to experience operating losses. Although management believes that the
Company will be able to attain sufficient levels of sales in order to meet its
operational needs, there can be no certainty that the Company will be able to
attain the necessary sales levels to meet its operational needs. Should the cash
flows generated from product sales and working capital be insufficient to
satisfy short term operating needs, the Company may have to significantly
curtail the current nature of its operations.

2. Earnings Per Share

   Basic earnings per share are calculated using the weighted average number of
shares outstanding during the period. Diluted earnings per share are calculated
using the weighted average number of shares outstanding during the period plus
the dilutive effect of outstanding stock options and warrants using the
"treasury stock", method and are not included since they are antidilutive.

3. Stockholders' Equity

   During the three months ended March 31, 2002, the Company issued 11,720
shares of common stock to employees pursuant to the exercise by those employees


                                       5
<PAGE>

of stock options granted under the 1998 Stock Option/Stock Issuance Plan,
resulting in cash proceeds of $5,400. Also during the three months ended March
31, 2002, the Company issued 200,000 shares of common stock to directors
pursuant to the exercise by those directors of stock options granted under the
1998 Stock Option/Stock Issuance Plan. Each of the two directors exercising
options received a $25,000 note from the Company to pay for the options. The
notes are for a term of three years, are due on March 5, 2005 and bear
semi-annual interest at 2.67% per annum.

4. Litigation

   The Company is currently not involved in any litigation that it believes
would have a materially adverse affect upon its financial results.

5. Restructuring Charge

   Effective March 31, 2002, the Company closed its Morgan Hill, California
corporate office facilities and relocated them to its pre-existing engineering
facility in Bellevue, Washington. In conjunction with the relocation, the
Company reduced administrative, sales and marketing headcount, and wrote off the
costs of leasehold improvements that had been previously made to the Morgan Hill
facility. A summary of the restructuring charges recognized during the quarter
ended March 31, 2002 is as follows:

            Category                         Charge

            Fixed assets abandonment      $    559,800
            Minimum lease payments             180,100
            Employee severance                 750,500
                                          ------------
                                          $  1,490,400

   Included in employee severance are the payments made to the Company's
co-founders, which aggregated $500,000, upon their departure in January 2002.
The costs associated with fixed assets disposals are comprised of the estimated
net book value of the assets, including furniture and fixtures, equipment and
leasehold improvements, which were written off upon the closure of the Morgan
Hill corporate office, as these assets will have no future utility. The Company
does not anticipate any material cash disposal costs to be incurred to dispose
of the fixed assets. The minimum lease payments are an estimate of the cash the
Company may need to disburse in order to fulfill its obligations under the
current Morgan Hill office lease and are equal to one year's worth of aggregated
monthly lease payments. Given current market conditions in the corporate real
estate rental market in Morgan Hill, the Company anticipates that its search for
a suitable sublessee should take approximately one year.


                                       6
<PAGE>

ITEM 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations

Forward-Looking Statements

   The following discussion of the financial condition and results of operations
of the Company contains forward-looking statements within the meaning of Section
27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act
of 1934. Actual results and the timing of certain events could differ materially
from those anticipated in these forward-looking statements as a result of
certain factors, including, but not limited to, those set forth under "Risk
Factors" in the Company's Annual Report on Form 10-K for the year ended December
31, 2001 and in other documents filed by the Company with the Securities and
Exchange Commission.

Overview

   We are developers of business connectivity software, including server-based
software, with an immediate focus on web-enabling applications for use by
various parties, including independent software vendors (ISVs), application
service providers (ASPs), corporate enterprises, governmental and educational
institutions, and others. Server-based computing, sometimes referred to as
thin-client computing, is a computing model where traditional desktop software
applications are relocated to run entirely on a server, or host computer. This
centralized deployment and management of applications reduces the complexity and
total costs associated with enterprise computing. Our software architecture
provides application developers with the ability to relocate applications
traditionally run on the desktop to a server, or host computer, where they can
be run over a variety of connections from remote locations to the desktop. Our
server-based technology works on today's most powerful personal computer, or
low-end network computer, without application rewrites or changes to the
corporate computing infrastructure.

   With our software, applications can be web enabled, without any modification
to the original application software required, allowing the applications to be
run from browsers or portals. In addition, the ability to access such
applications over the Internet creates new operational models and sales
channels. We provide the technology to access applications over the Internet.

   We entered both the UNIX and Linux server-based computing and web enabling
markets as early as 1996. We expanded our product offerings by shipping Windows
web-enabling software in early 2000.

   Effective April 1, 2002, we are headquartered in Bellevue, Washington, with
offices in Concord, New Hampshire and Reading, United Kingdom.

Critical Accounting Policies

   The preparation of financial statements and related disclosures in conformity
with accounting principles generally accepted in the United States requires us
to make judgments, assumptions and estimates that effect the amounts reported in
the Condensed Financial Statements and accompanying notes. Estimates are used
for, but not limited to, the accounting for the allowance for doubtful accounts,
the impairment of intangible assets, contingencies and other special charges and
taxes. Actual results could differ materially from these estimates. The


                                       7
<PAGE>

following critical accounting policies are impacted significantly by judgments,
assumptions and estimates used in the preparation of the Condensed Financial
Statements.

   The recognition of revenue is based on our assessment of the facts and
circumstances of the sales transaction. We will recognize revenue only when all
four of the following conditions have been met:

o Persuasive evidence of an arrangement exists;
o Delivery has occurred or services have been rendered;
o Our price to the customer is fixed or determinable; and
o Collectibility is reasonably assured

   The allowance for doubtful accounts is based on our assessment of the
collectibility of specific customer accounts and the aging of the accounts
receivable. If there is a deterioration of a major customer's credit worthiness
or actual defaults are higher than our historical experience, our estimates of
the recoverability of amounts due us could be adversely affected.

   We have experienced very little market volatility in the market prices of our
available-for-sale securities. These securities are recorded on the balance
sheet at fair value and we would recognize an impairment charge if a decline in
fair value below the cost basis were judged to be other than temporary. We
consider various factors in determining whether we should recognize an
impairment charge including, but not limited to the financial condition and the
near-term prospects of the issuer and our intent and ability to hold the
security until maturity. The ultimate market value realized on these securities
is subject to market volatility until they are sold.

   We will perform impairment tests on our intangible assets on an annual basis
and between annual tests in certain circumstances. In response to changes in
industry and market conditions, we may strategically realign our resources and
consider restructuring, disposing of, or otherwise exiting businesses, which
could result in an impairment of intangible assets.

   We are subject to the possibility of various loss contingencies arising in
the ordinary course of business. We consider the likelihood of the loss or
impairment of an asset or the incurrence of a liability as well as our ability
to reasonably estimate the amount of loss in determining loss contingencies. An
estimated loss contingency is accrued it is probable that a liability has been
incurred or an asset has been impaired and the amount of the loss can be
reasonably estimated. We regularly evaluate current information available to us
to determine whether such accruals should be adjusted.


Results of Operations for the Three-Month Period Ended March 31, 2002 Versus the
Three-Month Period Ended March 31, 2001


   Revenue

   Our revenues are primarily derived from product and patent technology
licensing fees. Other sources of revenue include service fees from maintenance
contracts and training fees. Total revenue for the three-month period ended


                                       8
<PAGE>

March 31, 2002 decreased by $1,734,900, or 74.8%, to $585,700 from $2,320,600
for the same period in 2001. The primary reason for the decrease in revenue was
a $1,600,000 decrease in patent licensing revenue to $0 for the three-month
period ended March 31, 2002. Revenue derived from our Windows-based products
during the three-month period ended March 31, 2002 increased by $28,600, to
$345,900 from $317,300 for the same period in the prior year. The increase was
primarily due to the commencement of revenue recognition of a sales transaction
for which we had been paid in full in December 2001. We anticipate recognizing
revenue from this transaction ratably throughout the remainder of 2002. Revenue
derived during the three-month period ended March 31, 2002 from our UNIX-based
products decreased by $167,900, to $182,000 from $349,900 for the same period in
the prior year. The decrease was primarily attributable to a nonrecurring sale,
amounting to $144,000, made during the three-month period ended March 31, 2001.

   Currently, a significant portion of licensing fees is derived from a limited
number of customers, which vary, sometimes significantly, from quarter to
quarter. We expect this trend to continue throughout 2002.

   Cost of Revenue

   Cost of revenue consists primarily of the amortization of acquired technology
or capitalized technology developed in-house. Under accounting principles
generally accepted in the United States, research and development costs for new
product development, after technological feasibility is established, are
recorded as "capitalized software" on our balance sheet and are subsequently
amortized as cost of revenue over the shorter of three years or the remaining
estimated life of the products. Other items included in cost of revenue are
customer service costs and shipping and packaging materials.

   Cost of revenue for the three-month period ended March 31, 2002 increased by
$72,600, or 19.0%, to $454,600 from $382,000 for the same period in 2001. The
increase for the three-month period ended March 31, 2002 is substantially
comprised of amortization resulting from the Menta technology acquisition made
at the end of the second quarter of 2001, partially offset by the asset
impairment charge we recorded as of December 31, 2001 against various components
of our purchased technology.

   We expect cost of revenue to approximate first quarter 2002 levels for the
next several quarterly reporting periods.

   Selling and Marketing Expenses

   Selling and marketing expenses primarily consist of salaries, sales
commissions, travel expenses, trade show related activities, promotional, and
advertising costs. Also included in selling and marketing expenses is
amortization of non-cash compensation resulting from the issuance of stock
options and warrants to various outside sales and marketing consultants. Selling
and marketing expenses for the three-month period ended March 31, 2002 decreased
by $616,700, or 43.3%, to $808,800 from $1,425,500 for the same period in 2001.

   The decrease for the three-month period ended March 31, 2002 is primarily due
to decreases in human resources costs, including salaries, fringe benefits and
commissions, travel expenses, recruiting costs and non-cash compensation. Our
headcount in sales and marketing decreased by eight, to 19 in the three-month
period ended March 31, 2002, from 27, in the three-month period ended March 31,
2001. As a result of the decreased headcount, human resources costs decreased by


                                       9
<PAGE>

$263,100, or 33.4%, to $524,300, for the three-month period ended March 31,
2002, from $787,400, for the same period in the prior year. Also as a result of
the decreased headcount, travel expenses decreased by $105,600, or 67.8%, to
$50,200 for the three-month period ended March 31, 2002, from $155,800, for the
same period in the prior year.

   Recruiting costs decreased by $58,500 to $0 for the three-month period ended
March 31, 2002 as compared to the same period in the prior year. We were
actively recruiting sales and marketing professionals during the three-month
period ended March 31, 2001 as we were expanding our sales force in conjunction
with our 2001 Windows sales and marketing initiatives. Since our September 2001
work force reduction, we have not been actively recruiting.

   Sales and marketing deferred compensation costs decreased by $34,500 to $0
for the three-month period ended March 31, 2002 as compared to the same period
in the prior year. The decrease was due to the expiration of certain third party
consulting contracts, over whose lifetime the deferred compensation was being
amortized.

   We determined during February 2002 that we would temporarily shift our sales
and marketing concentration for the balance of 2002 towards our UNIX products
and away from our Windows products. The purpose of this shift was two-fold.
First, this would free up our Windows-based engineers' time to allow them to
continue their efforts to refine our Windows-based product line, particularly
our Windows enterprise edition, GG:XP, so that those products can compete more
effectively in the market place. Second, since our UNIX products are already
competitive in the market place, they would be able to support an increased
sales and marketing concentration, and potentially generate more revenue for us
than they have done in the past. We do not expect this shift in sales to have a
material negative impact on our Windows-based revenue, as we will continue to
service and support our established Windows-based customers.

   We anticipate that selling and marketing expenses in future periods will be
lower than those incurred in the three-month period ended March 31, 2002 as we
continue to reduce our operating costs. Sales and marketing expenses were
approximately 138.1% and 61.4% of revenue for the three-month periods ended
March 31, 2002 and 2001, respectively.

   General and Administrative Expenses

   General and administrative expenses primarily consist of salaries and
associated benefits, legal and professional services, amortization of non-cash
compensation resulting from the issuance of stock options and warrants to
various financial consultants and bad debts expense. General and administrative
expenses for the three-month period ended March 31, 2002 decreased by $863,500,
or 57.3%, to $643,700 from $1,507,200 for the same period in 2001.

   Factors contributing to the decreased general and administrative expenses for
the three-month period ended March 31, 2002 as compared with the same period in
the prior year included decreased employee related expenses, decreased legal
fees, due to the cessation of our lawsuit with Citrix during the three-month
period ended March 31, 2001, and a decrease in non-cash compensation expense. We
reduced our general and administrative headcount by six, to nine, for the
three-month period ended March 31, 2002, from 15, for the three-month period
ended March 31, 2001. Also, as part of our workforce reduction in September


                                       10
<PAGE>

2001, several of our general and administrative employees began reduced workweek
schedules. As a result of these items, human resources costs for the three-month
period ended March 31, 2002 decreased by $266,200, or 58.2%, to $190,800, from
$457,000 for the same period in the prior year.

   General and administrative deferred compensation expense decreased by
$238,100, or 72.7%, to $89,300 for the three-month period ended March 31, 2002,
from $327,400, for the same period in the prior year. The decrease was due to
the expiration of certain third party consulting contracts, over whose lifetime
the deferred compensation was being amortized.

   Additionally, we reduced our bad debts reserve by $100,000 during the
three-month period ended March 31, 2002. No change was made to our bad debts
reserve during the similar period in the prior year.

   We anticipate that general and administrative expenses in future periods will
be lower that those incurred during the three-month period ended March 31, 2002
as we continue to reduce our operating costs. General and administrative
expenses were approximately 109.9% and 64.9% of revenues for the three-month
periods ended March 31, 2002 and 2001, respectively.

   Research and Development Expenses

   Research and development expenses consist primarily of salaries and benefits
to software engineers, payments to contract programmers, rent on facilities,
depreciation and computer related supplies. Research and development expenses
for the three-month period ended March 31, 2002 decreased by $540,400, or 40.0%,
to $812,800 from $1,353,200 for the same period in 2001.

   The decrease for the three-month period ended March 31, 2002 is primarily due
to a decrease in research and development salaries and benefits, and a decrease
in payments made to contract programmers. We reduced our research and
development headcount by 5, to 30, for the three-month period ended March 31,
2002, from 35, for the three-month period ended March 31, 2001. We believe that
a significant level of investment for research and development is required to
remain competitive. During 2002 we will continue working towards our goal of
full maturity for our products.

   Under accounting principles generally accepted in the United States, all
costs of product development incurred once technological feasibility has been
established, but prior to general release of the product, are to be capitalized
and amortized to expense over the estimated life of the underlying product,
rather than being charged to expense in the period incurred. No product
development amounts were capitalized in either of the three-month periods ended
March 31, 2002 or 2001, respectively.

   We anticipate that research and development expense in future periods will
approximate those incurred during the three-month period ended March 31, 2002.
Research and development expenses were approximately 138.8% and 58.3% of
revenues for the three-month periods ended March 31, 2002 and 2001,
respectively.

   Restructuring Charge

   During the three month period ended March 31, 2002, we relocated our
corporate offices from our Morgan Hill, California location to our Bellevue,
Washington location in an effort to consolidate operations, maximize


                                       11
<PAGE>

underutilized space and reduce costs. In addition to the relocation we also
reduced our headcount in the general and administrative and sales and marketing
areas.

   A summary of the restructuring charge is as follows:

            Category                         Charge

            Fixed assets abandonment      $    559,800
            Minimum lease payments             180,100
            Employee severance                 750,500
                                          ------------
                                          $  1,490,400

   No such restructuring charge was recorded during the three-month period ended
March 31, 2001.

   Included in employee severance are the payments made to our co-founders,
which aggregated $500,000, upon their departure, in January 2002. The costs
associated with fixed assets disposals are comprised of the estimated net book
value of the assets, including furniture and fixtures, equipment and leasehold
improvements, which were written off upon the closure of the Morgan Hill
corporate office, as these assets will have no future utility. We do not
anticipate any material cash disposal costs to be incurred to dispose of the
fixed assets. The minimum lease payments are an estimate of the cash we may need
to disburse in order to fulfill our obligations under the current Morgan Hill
office lease and are equal to one year's worth of aggregated monthly lease
payments. Given current market conditions in the corporate real estate rental
market in Morgan Hill, we anticipate that our search for a suitable sub lessee
might take approximately one year.

   We estimate that these restructurings and the restructurings that occurred
during September 2001 will generate cumulative operational savings, primarily
human resources costs, of approximately $3,000,000 to $4,000,000 during 2002.
However, due to the inherent uncertainties associated with predicting future
operations, there can be no assurances that such cumulative operational savings
will ultimately be realized.

   Other Income (Expense)

   Other income (expense) consists primarily of interest income on excess cash,
interest income on available-for-sale securities and interest expense on
short-term notes payable. Our excess cash is held in relatively low-risk, highly
liquid investments, such as U.S. Government obligations, bank and/or corporate
obligations rated "A" or higher by independent rating agencies, such as Standard
and Poors, or interest bearing money market accounts with minimum net assets
greater than or equal to one billion U.S. dollars.

   Other income (expense) for the three-month period ended March 31, 2002
decreased by $156,000, or 82.6%, to $34,100 from $190,100 for the same period
during 2001. Part of the decrease for the three-month period ended March 31,
2002 was due to lower amounts of excess cash and available-for-sale securities
on-hand as compared with the same period in 2001. Also responsible for the
decrease for the three-month period ended March 31, 2002 was the decrease in
interest rates being paid by our investments.

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<PAGE>

   Net Loss

   As a result of the foregoing items, net loss for the three-month period ended
March 31, 2002 was $3,590,500, an increase of $1,419,700 or 65.4%, from a net
loss of $2,170,800 for the same period during 2001. In response to our continued
operating loss we intend to continue to reduce our operating costs during 2002.

Liquidity and Capital Resources

   As of March 31, 2002, cash and cash equivalents and available-for-sale
securities totaled $4,993,500, a decrease of $1,967,100, or 28.3%, from
$6,960,600 as of December 31, 2001.

   The decrease in cash and cash equivalents was primarily attributable to net
cash used in operating activities, which was substantially comprised of our net
loss of $3,590,500. Operating activities that increased cash flow included: an
increase in accrued liabilities, $378,300; a decrease in accounts receivable,
$216,400; and a decrease in prepaid expense and other current assets totaling
$86,500. Offsetting these amounts were decreases in the provision for doubtful
accounts, $100,000; accounts payable, $35,000; and deferred revenue $11,300.

   The net cash provided by investing activities of $405,000 increased cash and
cash equivalents. Significant investing activities included: purchases of
available-for-sale securities, $510,400, which were offset by sales of
available-for-sale securities, $978,700; and the purchase of capital assets
including equipment, totaling $63,300.

   Accounts receivable as of March 31, 2002 decreased, net of the allowance for
doubtful accounts, by $116,400, or 18.8%, to $504,000, from $620,400 as of
December 31, 2001. The primary reason for the decrease was the collection of a
few large older receivables that had been outstanding as of December 31, 2001.
Because these older receivables had been outstanding as of December 31, 2001 and
were collected during the three-month period ended March 31, 2002, we were able
to reduce our provision for doubtful accounts while maintaining adequate
reserves against our current receivables.

   As of March 31, 2002, purchased technology was approximately $8,690,800,
which was unchanged from December 31, 2001. Purchased technology is comprised of
various acquired technologies that have been incorporated into one or more of
our products. These amounts are amortized to cost of revenue, generally over a
three-year period. Purchased technology amortization expense for the three-month
period ended March 31, 2002 increased by $19,800, or 6.4%, to $329,100 from
$309,300 for the three-month period ended March 31, 2001. The increase was due
primarily to the acquisition of the Menta technology during 2001, which was
partially offset by the asset impairment charge we recorded as of December 31,
2001 against various components of our purchased technology.

   Accounts payable as of March 31, 2002 decreased by $35,000, or 10.9%, to
$284,900 from $319,900 as of December 31, 2001. Accounts payable are comprised
of our various operating expenses and decreased due to the timing of the payment
of various invoices.

   Other current liabilities as of March 31, 2002 increased by $351,700, or
46.1%, to $1,113,800 from $762,100 as of December 31, 2001. Other current
liabilities are comprised of accrued expenses and notes payable. The increase in


                                       13
<PAGE>

other current liabilities was primarily due to an increase in accrued expenses.
Accrued expenses increased primarily due to minimum lease payments that were
accrued as part of the restructuring charge as of March 31, 2002. Also included
in accrued expenses are charges for services rendered for which an invoice had
not yet been received such as consulting fees, legal and accounting fees, and
utilities. Partially offsetting this increase was the payment in full of the
$26,600 note payable outstanding as of December 31, 2001.

   Deferred revenue as of March 31, 2002 decreased by $11,300, or 2.0%, to
$566,500 from $577,800 as of December 31, 2001. The decrease is due to the terms
of the various licensing agreements and maintenance contracts we had entered
into during the three-month period ended March 31, 2002, which were offset by
previously deferred items being recognized as revenue. Increases in deferred
revenue reflect the application of generally accepted accounting principles in
the United States, which set forth certain criteria for the current recognition
of revenue in the financial statements. Revenues which do not currently meet the
criteria are charged to deferred revenue and are recognized either ratably over
the time period during which purchased services are provided to the customer,
such as maintenance contracts, or at such time that all revenue recognition
criteria have been met.

   As of March 31, 2002, we had cash and cash equivalents of $1,711,000 as well
as $3,282,500 in available-for-sale securities compared to total liabilities of
$1,218,600, exclusive of deferred revenue of $566,500 and the estimated minimum
lease payments contained within our restructuring charge, that we might have to
make until we are able to identify a sub lessee, of $180,100.

   We continue to implement plans intended to control operating expenses and
capital expenditures as well as plans to manage accounts payable and accounts
receivable to enhance cash flows. We believe that through a combination of
strategic initiatives, including such things as; customer advance payments, a
temporary shift in sales and marketing concentration from our Windows-based
products to our Unix-based products, continued expense reductions and cash flows
from operations, and, if necessary, a strategic merger or similar business
combination, we will have sufficient liquidity to fund cash requirements for at
least the next 12 months. If we are unsuccessful in obtaining any of these
strategic goals, we would face a severe constraint on our ability to sustain
operations at current levels, and we would intend to adjust our operations
consistent with the available resources. Such adjustments might include further
work force reductions, exiting of facilities, or disposition of certain
operations.

New Accounting Pronouncements

   In June 2001, the Financial Accounting Standards Board finalized FASB
Statements No. 141, "Business Combinations" (SFAS 141), and No. 142, "Goodwill
and Other Intangible Assets" (SFAS 142). SFAS 141 requires the use of the
purchase method of accounting and prohibits the use of the pooling-of-interests
method of accounting for business combinations initiated after June 30, 2001.
SFAS 141 also requires that we recognize acquired intangible assets apart from
goodwill if the acquired intangible assets meet certain criteria. SFAS 141
applies to all business combinations initiated after June 30, 2001 and for
purchase business combinations completed on or after July 1, 2001. It also
requires, upon adoption of SFAS 142 that we reclassify the carrying amounts of
intangible assets and goodwill based on the criteria in SFAS 141.

   SFAS 142 requires, among other things, that we no longer amortize goodwill,
but instead test goodwill for impairment at least annually. In addition, SFAS


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<PAGE>

142 requires that we identify reporting units for the purposes of assessing
potential future impairments of goodwill, reassess the useful lives of other
existing recognized intangible assets, and cease amortization of intangible
assets with an indefinite useful life. An intangible asset with an indefinite
useful life should be tested for impairment in accordance with the guidance in
SFAS 142. SFAS 142 is required to be applied in fiscal years beginning after
December 15, 2001 to all goodwill and other intangible assets recognized at that
date, regardless of when those assets were initially recognized. SFAS 142
requires us to complete a transitional goodwill impairment test six months from
the date of adoption. We also are required to reassess the useful lives of other
intangible assets within the first interim quarter after adoption of SFAS 142.

   Pursuant to FAS 142, we will complete our test for intangible asset
impairment during second quarter 2002 and, if impairment is indicated, record
such impairment as a cumulative effect of accounting change effective January 1,
2002. We are currently evaluating the effect that the impairment review may have
on our results of operation and financial position.

ITEM 3. Quantitative and Qualitative Disclosures About Market Risk

   We are currently not exposed to any significant financial market risks from
changes in foreign currency exchange rates or changes in interest rates and do
not use derivative financial instruments. A substantial majority of our revenue
and capital spending is transacted in U.S. dollars. However, in the future, we
may enter into transactions in other currencies. An adverse change in exchange
rates would result in a decline in income before taxes, assuming that each
exchange rate would change in the same direction relative to the U.S. dollar. In
addition to the direct effects of changes in exchange rates, such changes
typically affect the volume of sales or foreign currency sales price as
competitors' products become more or less attractive.


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<PAGE>

PART II--OTHER INFORMATION


ITEM 2. Changes in Securities and Use of Proceeds

   During the three-month period ended March 31, 2002, we issued options to
purchase 428,500 shares of our common stock, at exercise prices ranging from
$0.25 to $0.68 per share, to various employees and directors pursuant to our
various Stock Option/Stock Issuance Plans.

   The granting of such stock options to the employees and directors was not
registered under the Securities Act of 1933 because the stock options either did
not involve an offer or sale for purposes of Section 2(a)(3) of the Securities
Act of 1933, in reliance on the fact that the stock options were granted for no
consideration, or were offered and sold in transactions not involving a public
offering, exempt from registration under the Securities Act of 1933 pursuant to
Section 4(2) and in compliance with Rule 506 thereunder.

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

(a) Exhibits

None

(b) Reports of Form 8-K

   On February 2, 2002 we filed a report on Form 8-K dated February 7, 2002 with
the Commission. We disclosed, under Item 5 (Other Events) of the Form 8-K that
the employment of each of Walter Keller and Robin Ford was terminated by mutual
agreement as of January 10, 2002.




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SIGNATURES

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

                                                GraphOn Corporation
                                                   (Registrant)

                                          Date:  May 15, 2002
                                          By:  /s/ Robert Dilworth
                                          ---------------------------------
                                                   Robert Dilworth,
                                          Chief Executive Officer (Interim) and
                                                 Chairman of the Board
                                             (Principal Executive Officer)

                                          Date:  May 15, 2002
                                          By:  /s/ William Swain
                                          ---------------------------------
                                                    William Swain,
                                                Chief Financial Officer
                                           (Principal Financial Officer and
                                             Principal Accounting Officer)













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