U.S. 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 September 30, 2002
                                        ------------------

[   ]    TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

         For the transition period from _______________ to __________________

                        Commission File Number: 0-22341

                                   AUG CORP.
                                   ---------
        (Exact name of Small Business Issuer as specified in its Charter)

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

           1900 Corporate Blvd., Suite 305W, Boca Raton, Florida 33431
           -----------------------------------------------------------
                    (Address of principal executive offices)

                                 (561) 241-9921
                                 --------------
                           (Issuer's telephone number)

          --------------------------------------------------------------
         (Former Name, former address and former fiscal year, if changed
                              since last Report.)

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


                      APPLICABLE ONLY TO CORPORATE ISSUERS

         State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date: 104,780,223 shares of
Common Stock as of November 15, 2002.


<PAGE>
<TABLE>
<CAPTION>
                                      INDEX


<S>                                                                              <C>
PART I.  FINANCIAL INFORMATION                                                   3
         ---------------------

Item 1.  Condensed Financial Statements (unaudited)                              3

         Balance Sheets                                                          3

         Statements of Operations                                                4

         Statements of Cash Flows                                                5

         Notes to Financial Statements                                           6

Item 2.  Management's Discussion and Analysis and Plan of Operations             13

Item 3.  Controls and Procedures                                                 15

PART II. OTHER INFORMATION                                                       16
         -----------------

Item 1.  Legal Proceedings                                                       16

Item 2.  Changes in Securities and Use of Proceeds                               16

Item 3.  Defaults Upon Senior Securities                                         17

Item 4.  Submissions of Matters to a Vote of Security Holders                    17

Item 5.  Other Information                                                       17

Item 6.  Exhibits and Reports on Form 8-K                                        17
</TABLE>

















                                       2
<PAGE>
PART I.  FINANCIAL INFORMATION
         ---------------------

Item 1.  Condensed Financial Statements
<TABLE>
<CAPTION>
                            AUG CORP. AND SUBSIDIARY
                            CONDENSED BALANCE SHEETS
                            ------------------------



                                     ASSETS
                                     ------
                                                                            September 30, 2002
                                                                              (Consolidated)      December 31, 2001
                                                                                (Unaudited)           (Restated)
                                                                            ------------------    -----------------
<S>                                                                             <C>                  <C>
CURRENT ASSETS
 Cash and cash equivalents                                                      $    178,185         $     36,079
 Cash advance for pending merger                                                          --              600,000
 Prepaid expenses and other assets                                                    49,906                   --
                                                                                ------------         ------------
       Total Current Assets                                                          228,091              636,079

Furniture, fixtures and equipment, net                                               181,963                   --

Goodwill                                                                          19,977,468                   --
                                                                                ------------         ------------

TOTAL ASSETS                                                                    $ 20,387,522         $    636,079
------------                                                                    ============         ============


                      LIABILITIES AND STOCKHOLDERS' EQUITY
                      ------------------------------------

CURRENT LIABILITIES
 Accounts payable                                                               $     85,148         $         --
 Accrued expenses                                                                     72,533                7,258
 Loans payable to related party                                                      975,000                   --
                                                                                ------------         ------------
       Total Current Liabilities                                                   1,132,681                7,258
                                                                                ------------         ------------

STOCKHOLDERS' EQUITY
 Preferred stock, Series A, $0.01 par value, 2,000,000 shares
  authorized, none issued and outstanding                                                 --                   --
 Common stock, $0.0001 par value, 148,000,000 shares authorized,
  104,780,223 and 82,189,964 shares issued and outstanding, respectively              10,479                8,220
 Additional paid-in capital                                                       44,911,255           22,887,815
 Accumulated deficit                                                             (25,666,893)         (22,267,214)
                                                                                ------------         ------------
       Total Stockholders' Equity                                                 19,254,841              628,821
                                                                                ------------         ------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                      $ 20,387,522         $    636,079
------------------------------------------                                      ============         ============

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

                                       3
<PAGE>
<TABLE>
<CAPTION>
                            AUG CORP. AND SUBSIDIARY
                       CONDENSED STATEMENTS OF OPERATIONS
                       ----------------------------------
                                   (UNAUDITED)





                                                        For the Three                    For the Nine
                                                        Months Ended     For the Three   Months Ended     For the Nine
                                                        September 30,    Months Ended    September 30,    Months Ended
                                                            2002         September 30,       2002        September 30,
                                                       (Consolidated)        2001       (Consolidated)        2001
                                                       --------------   --------------  --------------   --------------
<S>                                                    <C>              <C>              <C>              <C>
NET REVENUES                                           $      33,946    $          --    $      68,936    $          --
                                                       -------------    -------------    -------------    -------------

OPERATING EXPENSES
   General and administrative                                328,832            7,321        1,410,717            7,605
   Salaries, wages and consulting                            572,666               --        1,539,732               --
   Professional fees                                         160,583          127,866          518,166          148,125
                                                       -------------    -------------    -------------    -------------
       Total Operating Expenses                            1,062,081          135,187        3,468,615          155,730
                                                       -------------    -------------    -------------    -------------

LOSS FROM OPERATIONS                                      (1,028,135)        (135,187)      (3,399,679)        (155,730)
                                                       -------------    -------------    -------------    -------------

OTHER INCOME
   Gain on settlement of accounts payable                         --          108,134               --          108,134
                                                       -------------    -------------    -------------    -------------

LOSS BEFORE EXTRAORDINARY GAIN                            (1,028,135)         (27,053)      (3,399,679)         (47,596)

EXTRAORDINARY GAIN
  Gain on extinguishment of debt                                  --               --               --        1,665,043
                                                       -------------    -------------    -------------    -------------

NET (LOSS) INCOME                                      $  (1,028,135)         (27,053)      (3,399,679)   $   1,617,447
-----------------                                      =============    =============    =============    =============


Net (loss) income per share of common stock - basic
 and diluted                                           $       (0.01)   $       (0.02)   $       (0.04)   $        1.74
                                                       =============    =============    =============    =============


Weighted average number of shares outstanding during
 the period - basic and diluted                          102,560,948        1,314,964       92,551,672          932,154
                                                       =============    =============    =============    =============
</TABLE>
     See accompanying notes to condensed consolidated financial statements.

                                       4
<PAGE>
<TABLE>
<CAPTION>
                            AUG CORP. AND SUBSIDIARY
                       CONDENSED STATEMENTS OF CASH FLOWS
                       ----------------------------------
                                   (UNAUDITED)




                                                                                       For the Nine      For the Nine
                                                                                       Months Ended      Months Ended
                                                                                    September 30, 2002   September 30,
                                                                                      (Consolidated)         2001
                                                                                    ------------------   -------------
<S>                                                                                     <C>                <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
 Net (Loss) Income                                                                      $(3,399,679)       $ 1,617,447
 Adjustments to reconcile net (loss) income to net
   cash used in operating activities:
    Issuance of common stock for services                                                    51,250                 --
    Extraordinary gain on extinguishment of debt                                                 --         (1,665,043)
    Depreciation                                                                             82,828                 --
 Changes in assets and liabilities:
  Prepaid expenses and other current assets                                                  34,584                 --
  Accounts payable                                                                          (13,931)           (54,942)
  Accrued expenses                                                                           54,723            (57,684)
                                                                                        -----------        -----------
       Net Cash Used In Operating Activities                                             (3,190,225)          (160,222)
                                                                                        -----------        -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
 Purchases of furniture, fixtures and equipment                                            (222,604)                --
 Cash acquired in merger acquisition                                                        187,435                 --
 Capital expenditures to purchase Company stock                                                  --           (207,500)
                                                                                        -----------        -----------
       Net Cash Used In Investing Activities                                                (35,169)          (207,500)
                                                                                        -----------        -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
 Proceeds from the issuances of common stock, net                                         2,392,500            400,000
 Proceeds from loans                                                                        975,000                 --
 Note payable                                                                                    --             (6,432)
 Capital lease obligation                                                                        --            (46,760)
                                                                                        -----------        -----------
       Net Cash Provided By Financing Activities                                          3,367,500            346,808
                                                                                        -----------        -----------

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                            142,106            (20,914)

CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD                                              36,079             29,172
                                                                                        -----------        -----------

CASH AND CASH EQUIVALENTS - END OF PERIOD                                               $   178,185        $     8,258
-----------------------------------------                                               ===========        ===========
</TABLE>
SUPPLEMENTAL CASH FLOW INFORMATION:
-----------------------------------

Non Cash Investing and Financing Activities:

During the nine months ended September 30, 2002, 350,000 shares were issued
(275,000 valued at $0.05 per share and 75,000 shares valued at $.50 per share)
for the payment of services valued at $51,250.

During the nine months ended September 30, 2001, 65,743 shares valued at $658
were issued for the extinguishment of debt consisting of notes and interest
valued at $1,665,701. A gain on extinguishment of debt was recognized for
$1,665,043.

     See accompanying notes to condensed consolidated financial statements.

                                       5
<PAGE>
                            AUG CORP. AND SUBSIDIARY
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                            AS OF SEPTEMBER 30, 2002
                            ------------------------
                                   (UNAUDITED)

NOTE 1 ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
------ -----------------------------------------------------------

       (A) Organization
       ----------------

       AUG Corp. (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 an outstanding bridge loan and provide the
       Company with the necessary working capital to support its plan and
       ongoing operations. The Company began to seek alternative financing, but
       was unable to secure the necessary funds for extinguishment of the bridge
       loan.

       In January 1999, the Board of Directors decided to seek buyers, strategic
       partners and merger opportunities to make the Company economically
       viable.

       On March 11, 2000, Right2Web.Com, Inc. acquired 1,416,700 shares of the
       Company's preferred stock convertible into 92% of the outstanding shares
       of the Company's common stock. In return for the shares of preferred
       stock, Right2Web.Com, Inc. undertook to satisfy the Company's current
       debt and obligations and fund its operations. The transaction was valued
       at $40,480 and was accounted for as a reverse merger in 2000. The
       preferred stock was converted into common stock in 2001.

       In September 2001, the Board of Directors and a majority of the
       stockholders of the Company voted to change the name of the Company to
       AUG Corp. The name change became effective on October 29, 2001.

       Effective August 31, 2001, the Company entered into a Stock Purchase
       Agreement ("Agreement") with the purchaser, a Curacao, Netherlands
       Antilles corporation. Under this Agreement, the purchaser purchased
       2,000,000 shares of the Company's Series A Preferred Stock, par value
       $.01 and 670,854 shares of the Company's common stock (post 100:1 reverse
       stock split) for the sum of $400,000. The preferred shares were converted
       into an aggregate of 40,000,000 common shares, par value $.0001, upon the
       completion of a 100:1 reverse stock split of the Company's common stock.

       In addition, under the Agreement, the Company issued warrants to a
       company related to and controlled by the purchaser to purchase 10,000,000
       shares of the Company's common stock exercisable at $.01 per share until
       November 30, 2001; warrants to purchase 20,000,000 shares of the

                                       6

<PAGE>
                            AUG CORP. AND SUBSIDIARY
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                            AS OF SEPTEMBER 30, 2002
                            ------------------------
                                   (UNAUDITED)


       Company's common stock exercisable at $.05 per share until August 31,
       2004; and warrants to purchase 20,000,000 shares of the Company's common
       stock exercisable at $.10 per share until August 31, 2006. In November
       2001, the Company issued 10,000,000 shares of common stock in exchange
       for the 10,000,000 warrants that were exercisable at $.01 per share. In
       accordance with the Agreement, the Company also issued to another company
       controlled by the purchaser a cash-less exercisable option to purchase
       2,000,000 shares of the Company's common stock along with warrants to
       purchase 1,000,000 shares of the Company's common stock exercisable at
       $.05 per share until August 31, 2004 and was also issued warrants to
       purchase 1,000,000 shares of the Company's common stock at $.10 per share
       until August 31, 2006. In November 2001, the Company issued the 2,000,000
       shares of common stock upon the cash-less exercise of the related
       options.

       In January 2002, the Company acquired 100% of the common stock of
       Synthesys Secure Technologies, Inc. ("Synthesys"). The purchase price of
       the investment amounted to $20,181,948, and was comprised of a cash
       payment of $600,000 made in December 2001, and the issuance of 5,350,259
       shares of restricted common stock valued at $19,581,948. The shares were
       valued at the average quoted trading price during the acquisition period
       (See Note 4). The fair value of the investment at the acquisition date
       was determined to be $204,480. The excess of the purchase price over the
       fair value of the investment in the amount of $19,977,469 was accounted
       for as goodwill.

       Synthesys was formed on May 18, 2001 in the state of Florida. Synthesys
       is a global security solutions company specializing in security access to
       computer networks, buildings, offices, and other secure areas. Synthesys
       develops and markets a variety of innovative security-based products that
       are used to secure databases, to authenticate people over the phone, over
       the computer, and via cameras.

       In July 2002, the Company incorporated Biometrics Marketing Inc. ("BMI"),
       which is a 100% wholly owned subsidiary of AUG. BMI will perform
       marketing, sales and administrative functions.

       (B) Principles of Consolidation
       -------------------------------

       The accompanying condensed consolidated financial statements for 2002
       include the accounts of Aug Corp and its wholly owned subsidiaries
       Synthesys and BMI. All intercompany transactions and balances have been
       eliminated in consolidation. The pre-acquisition financial statements for
       2001 only included the accounts of the parent company, Aug Corp.

                                       7

<PAGE>
                            AUG CORP. AND SUBSIDIARY
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                            AS OF SEPTEMBER 30, 2002
                            ------------------------
                                   (UNAUDITED)


       (C) Use of Estimates
       --------------------

       In preparing condensed consolidated financial statements in conformity
       with accounting principles generally accepted in the United States of
       America, management is required to make estimates and assumptions that
       affect the reported amounts of assets and liabilities and the disclosure
       of contingent assets and liabilities at the date of the condensed
       consolidated financial statements and revenues and expenses during the
       reported period. Actual results could differ from those estimates.

       (D) Income (Loss) Per Common Share
       ----------------------------------

       Basic earnings (loss) per common share are based on net income (loss)
       divided by the weighted average number of common shares outstanding.
       Diluted earnings per common share are adjusted to reflect the incremental
       number of shares issuable for the assumed conversion of common stock
       purchase warrants if such adjustments are dilutive. Warrants to purchase
       42,000,000 shares of common stock were not included in the calculation of
       diluted EPS for "loss before extraordinary item" as the effect would be
       anti-dilutive. Additionally, there were no common stock equivalents
       outstanding for the three and nine months ended September 30, 2001. The
       weighted average shares outstanding for the three and nine months ended
       September 30, 2001 have been restated for the reverse stock splits that
       occurred in 2001.

       (E) Interim Condensed Consolidated Financial Statements
       -------------------------------------------------------

       The condensed consolidated financials statements as of September 30, 2002
       and for the three and nine months ended September 30, 2002 and the
       condensed financial statements of the parent company for the three and
       nine month ended September 30, 2001 are unaudited. In the opinion of
       management, such financial statements include all adjustments (consisting
       only of normal recurring accruals) necessary for the fair presentation of
       the financial position and the results of operations. The results of
       operations for the three and nine months ended September 30, 2002
       (consolidated) and for the three and nine months ended September 30, 2001
       are not necessarily indicative of the results to be expected for the full
       year. The condensed balance sheet information as of December 31, 2001 was
       derived from the audited financial statements included in the Company's
       Annual Report Form 10-KSB. The interim condensed financial statements
       should be read in conjunction with that report.

       (F) Furniture, Fixtures and Equipment
       -------------------------------------

       Furniture, fixtures and equipment are stated at cost less accumulated
       depreciation. Depreciation is computed using accelerated methods over the
       estimated economic useful lives of 5 to 7 years. Expenditures for repairs
       and maintenance are charged to expense as incurred and major improvements
       are capitalized.

                                       8
<PAGE>
                            AUG CORP. AND SUBSIDIARY
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                            AS OF SEPTEMBER 30, 2002
                            ------------------------
                                   (UNAUDITED)


       (G) Impairment of Long-Lived Assets
       -----------------------------------

       The Company has evaluated its long-lived assets for financial impairment,
       and will continue to evaluate them as events or changes in circumstances
       indicated that the carrying amount of such assets may not be fully
       recoverable.

       The Company evaluates the recoverability of long-lived assets not held
       for sale by measuring the carrying amount of the assets against the
       estimated undiscounted future cash flows associated with them. At the
       time such cash flows of certain long-lived assets are not sufficient to
       recover the carrying value of such assets, the assets are adjusted to
       their fair values.

       (H) Revenue Recognition
       -----------------------

       Revenue is recognized when all significant contractual obligations have
       been satisfied and collection of the resulting accounts receivable is
       reasonably assured. Revenue from software and engineering services are
       recognized at the time of delivery according to contractual terms and are
       recorded net of discounts and allowances.

       (I) Restatement of Financial Statements Resulting from the Correction of
       ------------------------------------------------------------------------
       an Error
       --------

       The accompanying balance sheet as of December 31, 2001 has been restated
       to correct an error for the overstatement of expenses and additional
       paid-in capital during 2001. The restatement results from the Company
       recording certain direct costs of raising capital as expense rather than
       as an offset to additional paid-in capital. The effect of the restatement
       was to decrease net accumulated deficit and decrease additional paid-in
       capital by $104,000 at December 31, 2001.

       (J) Going Concern
       -----------------

       The Company's condensed consolidated financial statements have been
       presented on the basis that it is a going concern, which contemplates the
       realization of assets and the satisfaction of liabilities in the normal
       course of business. For the nine months ended September 30, 2002, the
       Company has a net loss of $3,399,679 and a negative cash flow from
       operations of $3,190,225, and has a working capital deficiency of
       $904,590 and an accumulated deficit of $25,666,893 at September 30, 2002.
       These circumstances raise substantial doubt as to the Company's ability
       to continue as a going concern.

       The Company's ability to continue as a going concern is dependent on the
       Company's ability to raise additional capital, and implement its business
       plan. Management believes that actions presently taken to obtain
       additional funding provide the opportunity for the Company to continue as
       a going concern. The condensed consolidated financial statements do not
       include any adjustments that might result from the outcome of this
       uncertainty.

                                       9
<PAGE>
                            AUG CORP. AND SUBSIDIARY
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                            AS OF SEPTEMBER 30, 2002
                            ------------------------
                                   (UNAUDITED)


       (K) Reclassifications
       ---------------------

       Certain prior period amounts have been reclassified to conform to the
       current period's presentation.

NOTE 2 FURNITURE, FIXTURES AND EQUIPMENT
------ ---------------------------------

       The furniture, fixtures and equipment were acquired with the acquisition
       of the assets of SyntheSys on January 7, 2002. During the nine months
       ended September 30, 2002 the Company has acquired additional computer
       hardware and software of approximately $222,000 to increase the
       infrastructure of its information technology support and development
       capabilities.
<TABLE>
<CAPTION>
       Furniture, fixtures and equipment at September 30, 2002 consists of the
       following:
<S>                                                                          <C>
       Furniture and fixtures                                                $            11,027
       Computer hardware                                                                  90,204
       Computer software                                                                 153,841
       Equipment                                                                          20,073
                                                                             -------------------
                                                                                         275,145
       Less: accumulated depreciation                                                    (93,182)
                                                                             -------------------
                                                                             $           181,963
                                                                             ===================
</TABLE>
NOTE 3 AFFILIATED PARTY TRANSACTIONS
------ -----------------------------

       The Company pays a licensed broker dealer corporation owned by the
       president, fees for all funds raised for the Company from parties
       introduced by the broker dealer. Fees associated with transactions
       resulting in the issuances of common stock are recorded as a reduction of
       additional paid-in capital (See Note 4(B)).

       During the nine months ended September 30, 2002, the Company received
       loans from an affiliated party amounting to $1,100,000. In April 2002,
       the Company repaid $125,000 of the loans. At September 30, 2002 the
       unpaid balances on the loans amounted to $975,000. The loans bear
       interest at 10% and are due 180 days from the date the loans were
       originated. The due dates of the loans range from November 2002 through
       March 2003. In connection with the loans, the Company issued 75,000
       shares of common stock to affiliated parties valued at $3,750, and paid
       cash of approximately $230,000 to an affiliated party in payment of
       consulting fees relating to the loans. Such amounts are included in
       professional fees in the accompanying condensed consolidated statement
       of operations for the nine months ended September 30, 2002.

                                       10

<PAGE>
                            AUG CORP. AND SUBSIDIARY
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                            AS OF SEPTEMBER 30, 2002
                            ------------------------
                                   (UNAUDITED)


NOTE 4 STOCKHOLDERS' EQUITY
------ --------------------

       2002
       ----

       (A) Common Stock Issued for Acquisition
       ---------------------------------------

       In January 2002, the Company acquired 100% of the common stock of
       Synthesys. In connection with the purchase, the Company was to issue
       5,350,259 shares of restricted common stock valued at $19,581,948. The
       shares were valued at the average quoted trading price during the
       acquisition period. These shares were issued in August 2002.

       (B) Issuance of Common Stock for Cash and Services
       --------------------------------------------------

       For the nine months ended September 30, 2002, the Company issued
       14,920,000 shares of common stock for $2,392,500, net of direct costs of
       $357,500 to an affiliated party, according to various term sheets. The
       Company also issued 275,000 shares of common stock valued at $47,500 for
       consulting services related to the issuances.

       (C) Exercise of Common Stock Warrants
       -------------------------------------

       In May 2002 the Company issued 1,970,000 shares of common stock for two
       1,000,000 warrants in a cash-less exercise option of those warrants with
       exercise prices of $.035 and $.05 per share.

       2001
       ----

       In February 2001, 15,778,406 common shares were retired and replaced by
       3,944,602 common shares according to the 4:1 reverse stock split approved
       by the Board of Directors.

       In September 2001, the Board of Directors and a majority of the
       shareholders of the Company voted to effectuate a 100:1 reverse stock
       split of the Company's currently issued and outstanding shares of common
       stock. The reverse stock split became effective on October 29, 2001.

       All shares and per share amounts have been restated to reflect these
       transactions.

       (A) Issuance of Common Stock for Debt
       -------------------------------------

       In June 2001, 65,743 shares of common stock were issued for the
       settlement of debt. The shares were valued at $2,200 using the fair value
       as determined by an independent appraiser. This resulted in an
       extraordinary gain of $1,665,043.

                                       11
<PAGE>
                            AUG CORP. AND SUBSIDIARY
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                            AS OF SEPTEMBER 30, 2002
                            ------------------------
                                   (UNAUDITED)


       (B) Conversion of Outstanding Preferred Stock
       ---------------------------------------------

       In June 2001, the Company converted the 1,416,700 shares of preferred
       stock outstanding to 1,209,678 shares of common stock.

NOTE 5 LITIGATION
------ ----------

       An action was brought against the Company's subsidiary, Synthesys, prior
       to the acquisition by AUG Corp., by an investment broker, alleging breach
       of an investment-banking contract. This lawsuit was settled in May 2002
       by a confidential agreement between the parties that resulted in no
       change to the Company's condensed consolidated financial position,
       results of operations or cash flows.

NOTE 6 SUBSEQUENT EVENTS
------ -----------------

       In October 2002 the Company borrowed $300,000 from an affiliated company
       and issued a promissory note with 12% interest and a repayment term of
       120 days. In addition to the promissory note, 100,000 warrants to
       purchase the common stock of the Company were issued with an exercise
       price of $4.00 per share.

























                                       12
<PAGE>
Item 2.  Management Discussion and Analysis

General

         Management's discussion and analysis contains various forward-looking
statements within the meaning of the Securities and Exchange Act of 1934. These
statements consist of any statement other than a recitation of historical fact
and can be identified by the use of forward looking terminology such as "may,"
"expect," "anticipate," "estimates" or "continue" or use of negative or other
variations of comparable terminology. Management cautions that these statements
are further qualified by important factors that could cause actual results to
differ materially from those contained in forward looking statements, that these
forward looking statements are necessarily speculative, and there are certain
risks and uncertainties that could cause actual events or results to differ
materially from those referred to in forward looking statements.

Overview

         On January 7, 2002, the Company and its wholly-owned subsidiary, AUG
Acquisition Corp. ("AAC"), entered into an Agreement and Plan of Merger, dated
December 28, 2001 with SyntheSys Secure Technologies, Inc. ("Synthesys"). The
Merger Agreement provided that upon the terms and subject to conditions therein,
for the merger of AAC into Synthesys. Synthesys, the surviving corporation,
became a wholly owned subsidiary of the Company. Synthesys and AAC made the
appropriate filings to complete the Merger Agreement with the State of Florida
on January 7, 2002. The Company paid $600,000 cash and the shareholders of
Synthesys received an aggregate of 5,350,259 shares of the Company's Common
Stock in exchange for their interest in Synthesys.

         Synthesys, a Florida corporation, with its executive offices located in
Deerfield Beach, Florida, is a global secure solutions company that intends to
develop and market a variety of innovative security-based products that function
on multiple operating systems including Open VMS(TM), UNIX(TM), Linux(TM),
Windows NT(TM), Windows 2000(TM) and AS400(TM).

         Synthesys was incorporated in May 2001 under the name SyntheSys
Technologies, Inc. Its name was subsequently changed to SyntheSys Secure
Technologies, Inc.


                                       13
<PAGE>
         SyntheSys's operations are reflected in the results of operations for
the three month and nine month period ended September 30, 2002. As Synthesys was
not incorporated until May 2001, results of operations for the quarter and nine
months ended June 2001 only reflect the Company's activity since inception for
the second quarter of 2001. Since SyntheSys was not incorporated until May 2001,
the pro forma effect for the three and nine months ended September 30, 2001 is
insignificant.

Results of Operations for the Three Months ending September 30, 2002 and 2001

         The Company recognized revenues of $33,946 for the quarter ended
September 30, 2002. For the corresponding period of 2001 the Company did not
recognize any revenues. The Company's sales efforts are focused on continuing to
market its' biometric software and technical service products.

         The Company incurred $1,062,081 of operating expenses for the quarter
ended September 30, 2002, of these expenses, $572,666, were incurred from
salaries, wages and consulting fees associated with the continued development
and enhancement of the Company's biometric software products and marketing and
sales of these products. The operating expense also included general and
administrative expenses of $328,832. The Company also incurred $160,583 of
professional fees during the quarter ended September 30, 2002. Operating
expenses for the quarter ended September 30, 2001 was $135,187. These expenses
were primarily professional fees related to start up costs and expenses.

         The Company incurred a net loss for the quarter ended September 30,
2002 of $1,028,135. For the quarter ended September 30, 2001 the Company had a
net loss of $27,053.

Results of Operations for the Nine Months ending September 30, 2002 and 2001

         The Company had revenues of $68,936 for the nine months ended September
30, 2002. For the corresponding period of 2001 the Company did not recognize any
revenues.

         The Company incurred $3,468,615 of operating expenses for the nine
months ended September 30, 2002. Expenses increased during the nine months ended
September 30, 2002, as the Company increased personnel in both biometric
software development and finance. On a very selective basis the Company will
continue to evaluate the addition of key personnel. Operating expenses for the
nine months ended September 30, 2001 was $155,730. These expenses were primarily
professional fees incurred in the start-up of the Company.

                                       14
<PAGE>
         During the nine months ended September 30, 2001, 65,743 shares valued
at $658 were issued for the extinguishments of debt consisting of notes and
interest valued at $1,665,701. A gain on extinguishments of debt was recognized
for $1,665,043.

Liquidity and Capital Resources

         The Company's condensed consolidated financial statements have been
presented on the basis that it is a going concern, which contemplates the
realization of assets and the satisfaction of liabilities in the normal course
of business. For the nine months ended September 30, 2002, the Company has a net
loss of $3,399,679, a negative cash flow from operations of $3,190,225 and a
working capital deficiency of $904,590. The Company had an accumulated deficit
of $25,666,893 at September 30, 2002. These circumstances raise substantial
doubt as to the Company's ability to continue as a going concern. The Company's
ability to continue as a going concern is dependent on the Company's ability to
raise additional capital, and implement its business plan. The Company has
obtained short term financing and equity funding through the issuance of
restricted common stock and related party loans.

         For the nine months ended September 30, 2002, the Company issued
14,920,000 shares of common stock for $2,392,500, net of direct costs of
$357,500 to an affiliated party, according to various term sheets. The Company
also issued 275,000 shares of common stock valued at $47,500 for consulting
services related to the issuances.

         In May 2002, the Company issued 1,970,000 shares of common stock for
two 1,000,000 warrants in a cashless exercise option of those warrants with
exercise prices of $.035 and $.05 per share.

         During October and November 2002, the Company borrowed an aggregate of
$500,000 from an affiliated company and issued a promissory note with 12%
interest and a repayment term of 120 days. In addition to the promissory note,
100,000 warrants to purchase the common stock of the Company were issued with an
exercise price of $4.00 per share.

       The Company believes that the short term financing and equity funding
through the issuance of restricted common stock and related party loans is
sufficient to maintain operations over the next 12 months.

Item 3.  Controls and Procedures

Evaluation of disclosure controls and procedures
------------------------------------------------

         Within the 90 days prior to the filing date of this report, the Company
carried out an evaluation of the effectiveness of the design and operation of
its disclosure controls and procedures pursuant to Exchange Act Rule 13a-14.
This evaluation was done under the supervision and with the participation of the
Company's Principal Executive Officer and Principal Accounting Officer. Based
upon that evaluation, they concluded that the Company's disclosure controls and
procedures are effective in gathering, analyzing and disclosing information
needed to satisfy the Company's disclosure obligations under the Exchange Act.

Changes in internal controls
----------------------------

         There were no significant changes in the Company's internal controls or
in other factors that could significantly affect those controls since the most
recent evaluation of such controls.

                                       15


<PAGE>
PART II. OTHER INFORMATION

Item 1.  Legal Proceedings

         During the first quarter 2002 HD Brous & Co., Inc. filed an action in
the United States District Court for the Eastern District of New York against
the C. (HD Brous & Co., Inc. vs. Synthesys Secure Technologies, Inc. a/k/a
Synthesys Technologies, Inc., case # CV 02 910). By its Complaint, Brous alleged
that it Company's subsidiary, SyntheSys Secure Technologies, Inc performed
investment banking services for Synthesys and is entitled to be compensated.
This lawsuit was settled in May 2002 by an agreement between the parties that
resulted in no change to the Company's condensed consolidated financial
position.

         On May 10 2002, Information Transport Associates, Inc, Inc. filed an
action in the United States District Court in the Fifteenth Judicial Circuit of
Florida against the Company's subsidiary, Synthesys, Case No. 02-05130AH. By its
complaint, ITA alleges that it performed business, technical services for
Synthesys and is entitled to be compensated. This lawsuit was settled in
September 2002 by an agreement to pay $25,000.

Item 2.  Changes in Securities and Use of Proceeds

         In January 2002, the Company acquired 100% of the common stock of
Synthesys. In connection with the purchase, the Company was to issue 5,350,259
shares of restricted common stock valued at $19,581,948. The shares were valued
at the average quoted trading price during the acquisition period. These shares
were issued in August 2002.

         For the nine months ended September 30, 2002, the Company issued
14,920,000 shares of common stock for $2,392,500, net of direct costs of
$357,500 to an affiliated party, according to various term sheets. The Company
also issued 275,000 shares of common stock valued at $47,500 for consulting
services related to the issuances.

         In May 2002 the Company issued 1,970,000 shares of common stock
pursuant to the exercise of two warrants with cash-less exercise provisions. The
options had exercise prices of $.035 and $.05 per share.









                                       16
<PAGE>
       Between October and November 2002, the Company borrowed $500,000 from an
affiliated company and issued a promissory note with 12% interest and a
repayment term of 120 days. In addition to the promissory note, 100,000 warrants
to purchase the common stock of the Company were issued with an exercise price
of $4.00 per share.

         The securities issued in connection with the transactions above were
issued under the exemption from registration provided by Section 4(2) of the
Securities Act. The shareholders received information concerning the Company and
had the opportunity to ask questions about the Company. The securities issued
are marked with the appropriate restrictive legends.

Item 3.  Defaults Upon Senior Securities

         None.

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

         (a) Exhibits required by Item 601 of Regulation S-B

         The following exhibits are filed as part of this report:

         Exhibits:

2.1      Agreement and Plan of Merger, dated December 28, 2001 with SyntheSys
         Secure Technologies, Inc. (previously filed on Form 8-K filed February
         12, 2002).

         99.1     Certification of Principal Executive Officer

         99.2     Certification of Principal Accounting Officer

         (b) Reports on Form 8-K

         None.





                                       17
<PAGE>
                                    SIGNATURE


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

                                           AUG CORP

DATED: November 18, 2002                   By:  /s/ Laurence S. Isaacson
                                              ----------------------------------
                                                Laurence S. Isaacson, President


DATED: November 18, 2002                   By:  /s/ Jeff Barocus
                                              ----------------------------------
                                                Jeff Barocus, Principal
                                                Accounting Officer























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