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| GRAPHON CORPORATION                                           |   |                             |       |   |                            |   |       |        |   |   |        |   |
|---------------------------------------------------------------|--------|----------------------------------|------------|--------|---------------------------------|--------|------------|-------------|--------|--------|-------------|--------|
| Condensed Consolidated Balance Sheets                         |   |                             |       |   |                            |   |       |        |   |   |
|                                                          |   | September 30,                    |       |   | December 31,                    |   |       |        |   |   |        |   |
|                                                          |   | 2010                             |       |   | 2009                            |   |       |        |   |   |        |   |
| Assets                                                        |   | (Unaudited)                      |       |   | (Unaudited)                     |   |       |        |   |   |        |   |
| Cash                                                          |   | $                                | 2,125,700  |   |                            | $      | 2,852,900  |        |   |   |        |   |   |   |
| Accounts receivable, net                                      |   |                             | 724,600    |   |                            |   | 839,600    |        |   |   |        |   |   |   |
| Prepaid expenses                                              |   |                             | 76,200     |   |                            |   | 64,500     |        |   |   |        |   |   |   |
| Total current assets                                          |   |                             | 2,926,500  |   |                            |   | 3,757,000  |        |   |   |        |   |   |   |
| Property and equipment, net                                   |   |                             | 88,800     |   |                            |   | 127,100    |        |   |   |        |   |   |   |
| Patents, net                                                  |   |                             | 157,400    |   |                            |   | 511,700    |        |   |   |        |   |   |   |
| Capitalized software, net                                     |   |                             | 260,900    |   |                            |   | —    |        |   |   |        |   |   |   |
| Other assets                                                  |   |                             | 8,100      |   |                            |   | 14,800     |        |   |   |        |   |   |   |
| Total assets                                                  |   | $                                | 3,441,700  |   |                            | $      | 4,410,600  |        |   |   |        |   |   |   |
|                                                          |   |                             |       |   |                            |   |       |        |   |   |        |   |   |   |
| Liabilities and stockholders' equity                          |   |                             |       |   |                            |   |       |        |   |   |        |   |   |   |
| Accounts payable and accrued liabilities                      |   | $                                | 704,200    |   |                            | $      | 986,200    |        |   |   |        |   |   |   |
| Deferred revenue - current                                    |   |                             | 1,839,400  |   |                            |   | 1,862,600  |        |   |   |        |   |   |   |
| Total current liabilities                                     |   |                             | 2,543,600  |   |                            |   | 2,848,800  |        |   |   |        |   |   |   |
| Deferred revenue - long term                                  |   |                             | 717,300    |   |                            |   | 836,200    |        |   |   |        |   |   |   |
| Stockholders' equity                                          |   |                             | 180,800    |   |                            |   | 725,600    |        |   |   |        |   |   |   |
| Total liabilities and stockholders' equity                    |   | $                                | 3,441,700  |   |                            | $      | 4,410,600  |        |   |   |        |   |   |   |
|                                                          |   |                             |       |   |                            |   |       |        |   |   |        |   |   |   |
| Condensed Consolidated Statements of Operations               |   |                             |       |   |                            |   |       |        |   |   |        |
|                                                          |   | Three Months Ended September 30, |       |   | Nine Months Ended September 30, |   |
|                                                          |   |                             | 2010       |   |                            |   | 2009       |        |   |   | 2010        |   |   |   | 2009 |   |
|                                                          |   | (Unaudited)                      |       |   | (Unaudited)                     |   |       | (Unaudited) |   |   | (Unaudited) |   |
| Software revenue                                              |   | $                                | 1,546,900  |   |                            | $      | 1,480,900  |        |   | $      | 4,902,900   |   |   | $ | 4,311,000 |   |
| Intellectual property revenue                                 |   |                             | 225,000    |   |                            |   | 450,000    |        |   |   | 875,000     |   |   |   | 2,300,000 |   |
| Total revenue                                                 |   |                             | 1,771,900  |   |                            |   | 1,930,900  |        |   |   | 5,777,900   |   |   |   | 6,611,000 |   |
| Cost of revenue                                               |   |                             | 224,400    |   |                            |   | 277,800    |        |   |   | 699,400     |   |   |   | 1,267,700 |   |
| Gross profit                                                  |   |                             | 1,547,500  |   |                            |   | 1,653,100  |        |   |   | 5,078,500   |   |   |   | 5,343,300 |   |
|                                                          |   |                             |       |   |                            |   |       |        |   |   |        |   |   |   |   |   |
| Selling and marketing                                         |   |                             | 528,900    |   |                            |   | 448,900    |        |   |   | 1,604,000   |   |   |   | 1,396,100 |   |
| General and administrative                                    |   |                             | 762,200    |   |                            |   | 1,071,900  |        |   |   | 2,287,600   |   |   |   | 2,604,700 |   |
| Research and development                                      |   |                             | 533,800    |   |                            |   | 585,300    |        |   |   | 1,807,100   |   |   |   | 2,097,300 |   |
| Total operating expenses                                      |   |                             | 1,824,900  |   |                            |   | 2,106,100  |        |   |   | 5,698,700   |   |   |   | 6,098,100 |   |
| Loss from operations                                          |   |                             | (277,400   | )      |                            |   | (453,000   | )           |   |   | (620,200    | )      |   |   | (754,800 | ) |
| Other income, net                                             |   |                             | 1,100      |   |                            |   | 8,200      |        |   |   | 2,400       |   |   |   | 16,000 |   |
| Loss before income taxes                                      |   |                             | (276,300   | )      |                            |   | (444,800   | )           |   |   | (617,800    | )      |   |   | (738,800 | ) |
| Income taxes                                                  |   |                             | 700        |   |                            |   | 100        |        |   |   | 2,600       |   |   |   | 1,600 |   |
| Net loss                                                      |   | $                                | (277,000   | )      |                            | $      | (444,900   | )           |   | $      | (620,400    | )      |   | $ | (740,400 | ) |
| Loss per common share - basic and diluted                     |   | $                                | (0.01      | )      |                            | $      | (0.01      | )           |   | $      | (0.01       | )      |   | $ | (0.02 | ) |
| Weighted average shares outstanding – basic and diluted |   |                             | 45,981,625 |   |                            |   | 47,184,575 |        |   |   | 45,971,017  |   |   |   | 47,160,570 |   |

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