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 March 31, 2001

     ( ) Transition report under section 13 or 15(d) of the Securities  Exchange
Act of 1934


               For the transition period from -------- to --------

                         Commission file number 0-22341

                              AUGMENT SYSTEMS, INC.
             (Exact name of registrant as specified in its charter)

                  Delaware                                 04-3089539
                  --------                                 ----------
         (State or other jurisdiction of                (I. R. S. Employer
         incorporation or organization)               identification No.)

           1900 Corporate Blvd., Suite 305W, Boca Raton,     FL 33431
         (Address of principal executive offices)           (Zip Code)

                                 (561) 995-1447
              (Registrant's telephone number, including area code)

                             www.AugmentSystems.com
                        (Registrant's email designation)

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 requirement for the past 90 days.

(1) Yes [X] NO          (2) Yes [X]  NO

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

               Class                                Outstanding at May 1, 2001
               -----                                ---------------------------
Common stock, $.0001 par value per share                 131,486,717
<PAGE>
                              Augment Systems, Inc.

                          Index to Financial Statements


Report of Independent Certified Public Accountants


PART I       FINANCIAL INFORMATION

  ITEM 1     Financial Statements

             Balance sheet as of and March 31, 2001 and
              December 31, 2000

             Results of operations for the three months ended
              March 31, 2001 and March 31, 2000

             Statements of cash flows for the three months ended
              March 31, 2001 and March 31, 2000

             Statement of shareholders equity for the three months
              ended March 31, 2001

             Notes to financial statements

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


PART II      OTHER INFORMATION

  ITEM 1     Legal Proceedings
  ITEM 2     Changes in Securities
  ITEM 3     Defaults Upon Senior Securities
  ITEM 4     Submission of Matters to a vote of Security-Holders
  ITEM 5     Other Information
  ITEM 6     Exhibits and Reports on Form 8-K
             Signatures
<PAGE>




                              Augment Systems, Inc.

                                  Balance Sheet

<TABLE>
                                                                                     (Audited)
                                                                March 31            December 31,
                                                                  2001                  2000
                                                                  ----                  ----
                                     Assets

Current assets:
<S>                                                                <C>

   Cash                                                       $     12,239         $     29,172
                                                                ----------           ----------

     Total current assets                                     $     12,239         $     29,172
                                                                ==========           ==========

                      Liabilities and Stockholders' Deficit

Current liabilities:

   Accounts payable                                           $      54,942        $     54,942
   Accrued expenses                                                  72,080              77,570
   Convertible promissory notes                                       6,432               6,432
   Current portion of obligations under
     capital leases                                                  46,760              46,760
                                                                -----------         -----------

     Total current liabilities                                      180,214             185,704
                                                                -----------         -----------

Commitments

Stockholders' deficit:

   Preferred stock, $.01 par value; 2,000,000 shares
    authorized;  -0- issued and outstanding on
    March 31,2001, 1,416,700 shares issued and
    outstanding on December 31, 2000                                   -0-                 14,167
   Common stock, $.0001 par value; 148,000,000 shares
    authorized; 131,486,717 shares issued and outstanding
    on March 31, 2001; 15,778,406 shares issued and
    outstanding on December 31, 2000, par value $.01                 13,149               157,783
   Additional paid-in capital                                    21,957,844            21,798,385
   Deficit                                                      (22,138,968)         ( 23,792,568)
                                                                 ----------           -----------

     Total stockholders' deficit                                (   167,975)         (  1,822,233)
                                                                 ----------           -----------

     Total liabilities and stockholders' deficit             $       12,219         $      29,172
                                                                ===========            ==========
</TABLE>

The accompanying notes are an integral part of the financial statements.


<PAGE>

                              Augment Systems, Inc.

                            Statements of Operations



<TABLE>
                                                            Three Months Ended
                                                       March 31,           March 31,
                                                         2001                2000
                                                      ---------            --------

<S>                                                        <C>              <C>
Net sales                                            $       --           $      --
Cost of sales                                                --                  --
                                                          -----             -------
Gross margin (loss)                                        -0-                -0-
                                                          -----             -------

Operating expenses:

   Research and development expenses                        -0-                 -0-
   General and administrative expenses                   11,443              70,000
   Selling and marketing expenses                           -0-                 -0-
                                                        -------             -------

     Total operating expenses                            11,443              70,000
                                                        -------             -------

     Operating loss                                    ( 11,443)          (  70,000)
                                                        -------             -------

Other income (expense):

   Interest income, net                                     -0-                 -0-
   Interest expense                                         -0-                 -0-
                                                        -------            --------

     Total other expense, net                               -0-                 -0-
                                                        -------            --------

Net loss before extraordinary items                  (   11,443)          (  70,000)
Gain from extinguishments of debt                     1,665,043                 -0-
                                                        -------            --------

   Income (loss)                                      1,653,600           (  70,000)

Tax expense                                             578,760                 -0-
Tax benefit                                            (578,760)                -0-
                                                        -------            --------

 Net (loss) income                                  $ 1,653,600          $(  70,000)
                                                      =========            ========

Average number of shares outstanding                 73,632,561          11,898,951
                                                     ==========          ==========

Net Income (loss) per share of common stock:
   Basic and diluted                                  $  0.02             $  (0.01)
                                                         ====                 ====

See accompanying notes to financial statements.

</TABLE>
<PAGE>


                             Augment Systems, Inc.

                            Statements of Cash Flows
<TABLE>
                                                            Three Months Ended
                                                         March 31,         March 31,
                                                           2001              2000
                                                        ---------          --------

Cash flows from operating activities:
<S>                                                      <C>               <C>

   Net gain (loss)                                $    1,653,600       $  ( 70,000)
   Adjustments to reconcile net loss to net
   cash used for operating activities:
     Changes in operating assets and liabilities:
       Prepaid expenses                                                          --
       Accounts payable                                                          --
       Accrued expenses                               (  275,490)            30,000
       Bridge loan                                    (1,395,701)                --
       Insurance of capital stock                            658                 --
                                                        --------          ---------
     Net cash used for operating activities           (   16,933)         (  40,000)


   Cash flows from investing activities:
        Capital expenditures                                  --                 --
                                                       ---------         ----------

   Cash flows from financing activities:                      --                 --
                                                       ---------         ----------

   Net increase (decrease) in cash                       (16,933)          ( 40,000)
   Cash, beginning of period                              29,172             74,420
                                                       ---------          ---------

   Cash, end of period                               $    12,239         $   34,420
                                                       =========          =========

The accompanying notes are an integral part of the financial statements.

</TABLE>
<PAGE>

                    Supplemental Information for the Quarter
                              Ended March 31, 2001

1.    The Company  exchanged  6,574,336  (post reverse split shares) par value
 .0001 for notes and interest carried on the books at $1,665,701.

2.    The Company reverse split 15,778,406 shares of its common stock 1 for 4,
par value $.01 and issued 3,944,602 par value $.0001.

3.    The  Company  cancelled  1,416,700  preferred  shares  it had  issued to
Right2Web and issued them 120,967,779 shares par value $.0001 valued at $12,097.
<PAGE>
                                Augment Systems

                              Shareholders Equity

                                 March 31, 2001
<TABLE>

                                                                                             Additional
                                   Warrants            Common Stock         Preferred Stock    Paid-in
                                Number  Amount       Number    Amount       Number  Amount    Capital      Deficit        Total
                                ------  ------       ------    ------       ------  ------    -------      -------        -----
<S>                          <C>         <C>     <C>          <C>        <C>       <C>       <C>           <C>          <C>

January 1, 2001               2,200,850     --   15,778,406  $ 157,783   1,416,700 $14,167  $21,798,385  $(23,792,568) $(1,822,233)

Cancel shares and
 warrants on
 reverse split               (2,200,850)        (15,778,406) $(157,783)                         157,783                        -0-

Issue reverse split
 shares and warrants
 1 for 4                        550,212           3,944,602        394                       (      394)                       -0-

Issue shares in
 exchange for notes                               6,574,336        658                                                         658

Cancel preferred shares                                                 (1,416,700)(14,167)      14,167                        -0-

Issue shares in
 exchange for preferred
 shares at $.0001 par value                     120,967,719     12,097                       (   12,097)                       -0-

Gain for period                                                                                             1,653,600    1,653,000
                                ---------------------------------------------------------------------------------------------------

March 31, 2001                  550,212     --  131,486,717  $  13,149          --     --   $21,957,844  $(22,138,968) $(  167,975)
                                ===================================================================================================
</TABLE>

<PAGE>
                             Augment Systems, Inc.
                         Notes to Financial Statements

1.    Organization, Business and Basis of Presentation:

     The Company was  incorporated in 1990 to develop and distribute fiber optic
printed circuit boards in the publishing and printing  markets.  The fiber optic
products had limited  success and in fiscal 1994 the Company  began  phasing out
the fiber optic  operations and began the transition into a systems  integration
and engineering consulting business. In 1995, the Company made a strategic shift
in its business operation into the server market.

     In November 1998, the Company was informed by the investment  bank that had
provided  financing,  that they would be unable to secure the additional funding
required to repay the  outstanding  bridge loan and provide the Company with the
necessary  working capital to support its business plan and ongoing  operations.
The Company began to seek  alternative  financing,  but was unable to secure the
necessary funds.

      In  January  1999,  the  Board of  Directors  decided  to:

     1. Seek buyers,  strategic partners,  and merger  opportunities to make the
Company economically viable.

     2. Suspend ongoing operations, layoff all but one of its employees, dispose
of all assets, attempt to settle any outstanding short and long term debts, seek
buyers  or  strategic  partners  for the  further  development  of its  existing
technology as well as explore merger opportunities.

Operating Plan

     In the past two years,  the Company  began  implementing  its financial and
operating strategies.

     1. The Company sold the license rights to its technology.

     2. The Company  cancelled its operating  lease for its offices located at 2
Robbins Road, Westford,  Massachusetts.  No additional obligations were incurred
as a result of cancellation.

     3. The Company returned to a supplier  certain  equipment that was obtained
under a capital lease agreement.  In exchange for the cancellation of the lease,
the Company paid $6,800 in cash and transferred  certain accounts  receivable to
settle an additional $6,800 payable to the supplier.

     4. The Company was released  regarding  payment of any future  royalties on
its development agreements.

     5. In 2000, new management was installed based on an exchange of stock with
a company principally owned by a former director,  Mr. Jeffrey Leventhal and his
company, Right2web.com., Inc.

     The Company has incurred substantial losses since inception and was engaged
primarily in product  development.  The Company has funded its losses  primarily
from a  combination  of debt and equity  financings.  In addition,  at March 31,
2001,  the  Company  had  a  working  capital   deficiency  of  $167,976  and  a
stockholders'  deficit of $167,976.  Also,  management's initial concept to be a
business-to-business  e-commerce  venture,  the  Right2web  business  model,  is
subject to various risks  including  intense  competition,  need for substantial
funds  and  qualified   personnel,   internet   security   concerns,   potential
technological  difficulties,  development  of new  technology,  reliance  on key
personnel, and market conditions for internet companies. In the past few months,
because of the inherent risks, the Company has decided not to pursue Right2Web's
business  model.  However,  the Company  will pursue,  if  possible,  subject to
financing,  its original  concept of  developing  and  distributing  fiber optic
printed circuit boards in the publishing and printing industry. The Company will
also seek to acquire companies in related fields.

     The  Company's  shortage of capital,  uncertainty  of its business plan and
insufficient  qualified  personnel raise  substantial  doubt about the Company's
ability to continue as a going concern.  The accompanying  financial  statements
have been prepared on a going concern basis,  which contemplates the realization
of assets and the  satisfaction  of  liabilities  and  commitments in the normal
course of business. The financial statements do not include any adjustments that
might result from the outcome of this uncertainty.
<PAGE>
                            Augment Systems, Inc.
                         Notes to Financial Statements
                                  (Continued)



2.    Summary of Significant Accounting Policies

      Estimates and Assumptions

      The  preparation  of financial  statements  in conformity  with  generally
accepted  accounting  principles  requires  management  to  make  estimates  and
assumptions  that  affect the  reported  amounts of assets and  liabilities  and
disclosure of  contingent  assets and  liabilities  at the date of the financial
statements  and the  reported  amounts  of  revenues  and  expenses  during  the
reporting period. Actual results could differ from those estimates.

     Cash Equivalents

     The Company  considers  all highly  liquid  investments  with a maturity of
three months or less, when purchased, to be cash equivalents. There were no cash
equivalents at December 31, 2000 or March 31, 2001.

     Inventories

     The Company had no  inventories as of December 31, 2000 and March 31, 2001.
Inventories  would be  stated  at the  lower of cost  (first-in,  first-out)  or
market.

     Property and Equipment

     Property and  equipment are to be recorded at cost.  Depreciation  is to be
computed using the  straight-line  method over the estimated useful lives of the
related  assets.  Property held under capital leases is to be amortized over the
lesser of the lease term or their estimated  useful lives. As of March 31, 2001,
the Company had no fixed assets.

     Long-Lived Assets

     The Company  will  follow the  provisions  of the  Statement  of  Financial
Accounting  Standards  ("SFAS")  No.  121  "Accounting  for  the  Impairment  of
Long-Lived  Assets  and for  Long-Lived  Assets  to be  Disposed  of".  SFAS 121
establishes  accounting  standards for the  impairment of long-lived  assets and
certain  identifiable  intangibles to be held and used and for long-lived assets
and certain identifiable intangibles to be disposed of.

     The  Company  will  review  the  carrying  values  of  its  long-lived  and
identifiable  intangible  assets  for  possible  impairment  whenever  events or
changes in circumstances indicate that the carrying amount of the assets may not
be recoverable.

     Revenue Recognition

     Revenue is to be  recognized  on sales to end users when the  products  are
accepted by the customer. Freight charged to customers will be included in Gross
sales.

     Research and Development

     When research and  development  costs are incurred they will be expensed as
incurred.

     In  accordance  with  Statement of Financial  Accounting  Standards No. 86,
Accounting  for the Costs of Computer  Software to be sold,  Leased or Otherwise
Marketed,  the Company will capitalize software development costs incurred after
technological  feasibility of the software  development  projects is established
and the  reliability  of such  capitalized  costs through  future  operations is
expected.


<PAGE>

                           Augment Systems, Inc.
                         Notes to Financial Statements
                                  (Continued)


2.   Summary of Significant Accounting Policies (continued)

     Income Taxes

     Income  taxes  are  calculated  using the  liability  method  specified  by
Statement of  Financial  Accounting  Standards  No. 109,  Accounting  for Income
Taxes.

      Financial Instruments

      The estimated  fair value of the Company's  financial  instruments,  which
include  accounts  payable,   related  party  accounts,   debt  instruments  and
convertible promissory notes, approximate their carrying value.

      Stock Options

      The  Company  follows  the  provisions  of SFAS No.  123,  Accounting  for
Stock-Based  Compensation.  The  Company  has elected to continue to account for
stock options at their  intrinsic  value with  disclosure of the effects of fair
value  accounting on net earnings  (loss) and earnings (loss) per share on a pro
forma basis.

     Net Loss Per Share of Common Stock

     The Company  follows the  Statement of Financial  Accounting  Standards No.
128, Earnings Per Share ("SFAS No. 128"). SFAS No. 128 requires the presentation
of both basic and diluted earnings per share.


3.   Financing Arrangements

     Bridge Financing

     In September  1998,  the Company  obtained  $1,500,000 in bridge  financing
consisting  of secured  convertible  promissory  notes and 750,000  common stock
purchase warrants. The promissory notes bore interest at the rate of 8% and were
to be repaid at the earlier of July 31, 1999 or (i) any sale, pledge, assignment
or disposition of any assets of the borrower (ii) any merger or consolidation of
the  borrower  or "change of control"  of the  borrower or (iii)  proceeds of at
least  $4,000,000 from the sale or issuance of any debt or equity  securities or
proceeds of any loans.  Each  warrant was  exercisable  for the number of shares
equal to 50% of the principal  amount of the loan. The warrants were exercisable
at $.40 per share and expire five years from the date of issuance.

     In the First Quarter of 2001, the Bondholders received 6,574,336 post split
common  shares,  par value  .0001,  of the  Company  in  exchange  for the total
outstanding  Bonds,  warrants  and  interest  of  $1,665,701.  The  exchange  is
reflected on the Income Statement of the Company as an extraordinary gain on the
extinguishment of debt.


4.   Commitments

     Leases

     The Company was obligated for rental  payments  under two operating  leases
for  facilities  that expire  through  August 2001.  The Company  negotiated the
cancellation  of those  leases  effective  January  1,  1999 and has had no rent
expense for 2000 and the First Quarter of 2001.

     The remaining obligation, under a non-cancellable capital lease, is for the
Company's telephone equipment which was returned in 1999. The amount owed on the
balance of the lease is  estimated  at $46,700  and is  included  under  current
liabilities.
<PAGE>

                             Augment Systems, Inc.
                          Notes to Financial Statements
                                   (Continued)

5.   Related Party Transactions and Subsequent Events

     On March 11,  2000,  the Company  entered into a Stock  Purchase  Agreement
pursuant to which the Company sold to Right2web.Com, Inc. ("Right2web") for 100%
of the outstanding shares of Right2web, a start-up business-to-business internet
venture,  120,967,719  post split common shares which gave  Right2Web.Com  a 92%
interest in the  Company.  Current  stockholders  received  3% of the  Company's
common  stock and the  convertible  note holders  received 5%. This  transaction
closed in December  2000, but the shares were not issued until 2001. The results
of the transaction were recorded in the First Quarter of 2001.

     Right2Web.Com,  was  owned  principally  by  Jeffrey  Leventhal,  a  former
director  of the  Company,  who had  resigned  in March  1999 and is now CEO and
Chairman of the Board of Directors of the Company.


6.    Income Taxes

      Deferred income taxes reflect the net tax effects of temporary differences
between the carrying  amounts of assets and liabilities for financial  reporting
purposes and the amounts used for income tax purposes.


     In  accordance  with IRC Sec.  382,  the  Company  conducted  the  tests of
ownership change at the dates when the ownership  percentage of a 5% shareholder
had increased.  The results for the testing period (three years) showed that the
changes of individual  ownership  percentages  of all 5%  shareholders  from the
lowest  percentage  of same  shareholders  exceeded  50%.  Under IRC Section 382
(k)(3),  due to the change in  ownership,  the Company is entitled to use only a
predetermined  annual amount  against the income of any  post-change  year.  The
annual  limitation  amount is equal to the  product  of the  federal  long-term,
tax-exempt  interest rate (with some  modifications)  multiplied by the value of
the Company's  common stock  immediately  before ownership  change.  The Company
believes  that  it is  more  likely  than  not  that  the  tax  benefit  of  NOL
carryforwards  under  IRC  Section  382  may  not  materialize  in  the  future.
Consequently, an allowance of equal amount is set up against the tax assets.


7.   Capital Stock

     Preferred Stock

     In July 1995, the Board of Directors  approved an increase in the number of
authorized  shares of preferred  stock from 593,602 shares to 2,000,000  shares.
The preferred stock may be issued in one or more series,  the terms of which may
be determined at the time of issuance by the Board of Directors, without further
action by stockholders,  and may include voting rights, preferences to dividends
and liquidation,  conversion and redemption  rights and sinking fund provisions.
In 2000, the Company exchanged 1,416,700 preferred shares for 100% of the shares
of  Right2web.com,  Inc. The  transaction  was valued at $40,480.  The preferred
shares were converted  into 92% of the outstanding  shares of the Company which
was accomplished in the First Quarter of 2001.

      Common Stock

     In June 1998, the Board of Directors  approved an increase in the number of
authorized shares of common stock from 30,000,000  shares to 50,000,000  shares.
In 2000,  the  shareholders  approved  an  increase  in  authorized  shares from
50,000,000 to 148,000,000, effective in 2001.

<PAGE>

                              Augment Systems, Inc.
                          Notes to Financial Statements
                                   (Continued)



8.   Net Loss Per Share of Common Stock

     The Company follows the Statement of Financial  Accounting Standards (SFAS)
No. 128, Earnings per Share, issued by the Financial Accounting Standards Board.
Under SFAS No. 128, the basic and diluted net loss per share of common stock for
the quarters ended March 31, 2001 and March 31, 2000 is computed by dividing the
net gain (loss) by the  weighted  average  number of common  shares  outstanding
during the period.

      The weighted average number of common shares  outstanding is summarized as
follows:
 <TABLE>
                                                             March 31,
                                                     ---------------------------
                                                       2001            2000
                                                     -----------    ---------
<S>                                                     <C>                 <C>
 Denominator for basic and diluted gain (loss)
  per share:
 Weighted average common stock
  shares outstanding                                 73,632,561     11,898,951
</TABLE>

     The Company's  unissued  convertible  preferred stock,  unissued shares and
other  convertible  instruments  are not considered  outstanding for the diluted
calculation since their effect is antidilutive.

<PAGE>

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

         The Private  Securities  Litigation  Reform Act of 1995  contains  safe
harbor provisions regarding  forward-looking  statements.  Except for historical
information contained herein, the matters discussed in the Liquidity and Capital
Resources  section below contain potential risks and  uncertainties,  including,
without  limitation,  risks  related to the  Company's  ability to  successfully
identify  potential  merger  partners,  retain  key  employees  and  settle  any
outstanding debts. The Company will need to attract partners in order to execute
its revised  business  strategy,  and there can be no assurance that the Company
will be successful in attracting such partners.

General

         In January  1999,  the Board of  Directors  elected to suspend  ongoing
operations,  layoff all but one of its employees, dispose of all assets, attempt
to settle  any  outstanding  short  and long term  debts,  seek  buyers  for its
technology, and explore merger opportunities.

     Prior to January 15, 1999, Augment Systems,  Inc.  designed,  developed and
sold fibre optic channel based network file server systems  designed to increase
data  transfer and file storage on computer  networks.  In September  1998,  the
Company obtained $1,500,000 in bridge financing of convertible  promissory notes
and common stock purchase  warrants.  The Company used a portion of the proceeds
of the bridge  financing to repay in full its  indebtedness  to a major bank. In
November 1998, the Company was informed by an investment bank, that provided the
bridge  financing,  that they would be unable to secure the  additional  funding
required to repay the  outstanding  bridge  loan,  provide the Company  with the
necessary  working  capital to support the  execution of its  business  plan and
ongoing operations.  The Company began to seek alternative  financing,  but, was
unable to secure the funds necessary to maintain ongoing operations.

Plan of Operation

     In  January  1999,  the  Board of  Directors  elected  to  suspend  ongoing
operations,  layoff all but one of its employees, dispose of all assets, attempt
to settle  any  outstanding  short  and long term  debts,  seek  buyers  for its
technology, and explore merger opportunities.

     During the year 2000,  effective in the First Quarter of 2001,  the Company
exchanged  its bridge  financing of  $1,500,000  for shares,  reverse  split its
common stock 1 for 4 and brought in new  management  through the exchange of its
shares with  Right2Web.  New  management is seeking meager targets and trying to
reestablish the fiber channel based network file server systems business.

     There was no revenue  for the  quarters  ended March 31, 2000 and March 31,
2001.

     The Company incurred no research and development costs for the two quarters
ended  March 31,  2000 and March  31,  2001.  The  Company  does not  anticipate
spending any  additional  funds on research  and  development  in the  immediate
future.

     General and administrative costs for the quarters ended March 31, 2000 were
$70,000 as  compared  to $11,445  for the  quarter  ended  March 31,  2001.  The
decrease is mostly attributable to decreased spending on professional fees.

     The Company  incurred  no sales and  marketing  costs for the two  quarters
ended March 31, 2000 and March 31, 2001.

     The Company recognized a net profit for the quarter ended March 31, 2001 of
$1,653,600  as compared to a net loss of $70,000 for the quarter ended March 31,
2000. The main difference  between 2001 and 2000 was the  extinguishment of debt
of $1,665,043.

     The  Company  currently  has  three  unpaid  part-time  employees  who  are
attempting to settle any outstanding  short and long-term debts, seek buyers for
its  technology,  explore  merger  opportunities,  and  start to  redevelop  the
Company's fiber channel technology.

Liquidity and Capital Resources

     The Company has negative  working capital of $167,975 and an operating loss
of $11,445 for the quarter ended March 31, 2001.

     These  factors  raise  substantial  doubt  about the  Company's  ability to
continue as a going  concern.  The Company is dependent on its ability to settle
all debts with  creditors,  attract  purchasers of the Company's  technology and
attract potential merger partners,  which will undoubtedly result in substantial
dilution to existing  shareholders.  Although the Company has effectively ceased
operations,  there are several unsecured creditors who could commence litigation
against the  Company.  In the event that the Company has  insufficient  funds to
settle or defend these  matters,  the Company or its  creditors  could cause the
filing of a bankruptcy proceeding.

     The Company is presently  authorized to issue up to  148,000,000  shares of
its Common Stock and up to 2,000,000  shares of Preferred Stock. As of March 31,
2001,  there were  131,486,717  shares of the Company's  Common Stock issued and
outstanding and no Preferred Stock issued and outstanding.

Capital Expenditures

     The Company does not have any commitments for capital  expenditures at this
time.

Effects of Inflation

         The Company  believes  that the  relatively  moderate rate of inflation
over the past few years has not had a significant  impact on the Company's sales
or operating results.

Income Taxes

     The Company adopted Statement No. 109 "Accounting for Income Taxes" in 1993
and its implementation has had no effect on the Company's financial position and
results of operation.

<PAGE>
PART II. OTHER INFORMATION

ITEM 1.               LEGAL PROCEEDINGS
                      ------------------
                      None

ITEM 2.               CHANGES IN  SECURITIES
                      ----------------------
                      During the year 2000, the Company's shareholders approved
                      an increase in the authorized  shares of the Company from
                      50,000,000 to 148,000,000 and a change in par value from
                      $.01 to $.0001,  all  effective in the First Quarter of
                      2001.

ITEM 3.               DEFAULTS UPON SENIOR SECURITIES
                      -------------------------------
                      In September 1999, the Company defaulted on its
                      convertible notes.  In April 2000,  the note holders
                      were requested to convert their notes to equity.  All
                      the notes were converted to equity effective in the First
                      Quarter of 2001.

ITEM 4.               SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
                      ---------------------------------------------------
                      None

ITEM 5.               OTHER INFORMATION
                      -----------------
                      None

ITEM 6.               EXHIBITS AND REPORTS ON FORM 8-K
                      ---------------------------------
                      There were no Form 8-Ks filed during the quarter ended
                      March 31,2001

<PAGE>

SIGNATURES

Pursuant to the  requirements of Section 13 or 15(d) 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.

                                  AUGMENT SYSTEMS, INC.
DATE:
May 15, 2001                      By:/s/Duane A. Mayo
-------------                    --------------------

                                  Duane A. Mayo
                                  Chief Financial Officer
                                  Treasurer and Director
                                 (Principal Financial and Accounting Officer)