UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB

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

     For the three months ended December 31, 2002

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

     Commission file number 0-16172

                                  SYMBIAT, INC.
        (Exact name of small business issuer as specified in its charter)

           Delaware                                              23-2472952
-------------------------------                              -------------------
(State or other jurisdiction of                                 (IRS Employer
incorporation or organization)                               Identification No.)

                      4920 Avalon Ridge Parkway, Suite 600
                      ------------------------------------
                    (Address of principal executive offices)

         Issuer's telephone number, including area code: (770) 638-6999

                                       N/A
                                       ---
              (Former name, former address and former fiscal year,
                          if changed since last report)

Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Exchange  Act 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:  17,396,521 shares of common stock on
February 3, 2003.

Transitional Small Business Disclosure Format (check one): Yes     No  X
                                                               ---    ---

<PAGE>

                                  SYMBIAT, INC.

                                      INDEX

                         PART I - FINANCIAL INFORMATION

ITEM 1.   Financial Statements:

          Unaudited  Consolidated  Balance  Sheets as of December
          31, 2002 and March 31, 2002                                          3

          Unaudited Consolidated Statements of Operations for the
          three months  ended  December 31, 2002 and December 31,
          2001                                                                 4

          Unaudited Consolidated Statements of Operations for the
          nine months  ended  December  31, 2002 and December 31,
          2001                                                                 5

          Unaudited Consolidated Statements of Cash Flows for the
          nine months  ended  December  31, 2002 and December 31,
          2001                                                                 6

          Notes to Unaudited Consolidated Financial Statements                 7

ITEM 2.   Management's   Discussion  and  Analysis  of  Financial
          Condition and Results of Operations                                 15

ITEM 3.   Controls and Procedures                                             20

                           PART II - OTHER INFORMATION

ITEM 1.   Legal Proceedings                                                   21

ITEM 2.   Changes in Securities                                               21

ITEM 3.   Defaults Upon Senior Securities                                     21

ITEM 6.   Exhibits and Reports on Form 8-K                                    21

SIGNATURES                                                                    22

                                        2
<PAGE>

                         PART I - FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements

                          Symbiat, Inc. and Subsidiary
                 (Formerly Computone Corporation and Subsidiary)
                           Consolidated Balance Sheets
                        (in thousands, except share data)

<TABLE>
<CAPTION>
                                                                    December 31, 2002     March 31, 2002
                                                                    -----------------    -----------------
                                                                       (unaudited)
<S>                                                                    <C>                  <C>
ASSETS
Current assets:
    Cash and cash equivalents                                          $         57         $         70
    Receivables, net of allowance for doubtful accounts of
       $94 as of December 31, 2002 and $92 as of March 31, 2002                 190                  490
    Inventories, net                                                            129                1,257
    Prepaid expenses and other                                                   52                   83
                                                                       ------------         ------------
Total current assets                                                            428                1,900

Property and equipment, net                                                      38                  393

Goodwill                                                                         --                8,078

Software development costs, net of accumulated amortization
   of $304 as of March 31, 2002                                                  --                  211

Other                                                                            25                    7
                                                                       ------------         ------------

TOTAL ASSETS                                                           $        491         $     10,589
                                                                       ============         ============

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
    Accounts payable, trade                                            $      1,171         $      1,815
    Accrued liabilities:
         Deferred maintenance revenue                                           592                  906
         Accrued lease liability                                              1,052                   --
         Interest                                                               502                  215
         Other                                                                1,007                  932
   Line of credit                                                                30                   57
   Notes payable to stockholders                                                483                  413
   Current maturities of long-term debt                                       2,603                2,600
                                                                       ------------         ------------
Total current liabilities                                                     7,440                6,938

Long-term debt, less current maturities                                          --                  100
                                                                       ------------         ------------

Total liabilities                                                             7,440                7,038
                                                                       ------------         ------------

Commitments and contingencies

Series A redeemable convertible preferred stock, $10 stated
  value; 400,000 shares authorized; 123,229 and 107,437 shares
  issued and outstanding, as of December 31, 2002 and March 31,
  2002, respectively                                                          1,049                  982
                                                                       ------------         ------------

Stockholders' equity:
  Common stock, $.01 par value; 25,000,000 shares authorized;
  16,896,521 and 14,469,200 shares issued and outstanding,
   as of December 31, 2002 and March 31, 2002, respectively                     169                  145
  Additional paid-in capital                                                 61,520               60,974
  Accumulated deficit                                                       (69,687)             (58,550)
                                                                       ------------         ------------
Total stockholders' equity                                                   (7,998)               2,569
                                                                       ------------         ------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                             $        491         $     10,589
                                                                       ============         ============
</TABLE>

                 See notes to consolidated financial statements.

                                        3
<PAGE>

                         PART I - FINANCIAL INFORMATION

                          Symbiat, Inc. and Subsidiary
                 (Formerly Computone Corporation and Subsidiary)
                      Consolidated Statements of Operations
                      (in thousands, except per share data)

<TABLE>
<CAPTION>
                                                                          For the three months ended
                                                                    --------------------------------------
                                                                    December 31, 2002    December 31, 2001
                                                                    -----------------    -----------------
                                                                       (unaudited)
<S>                                                                    <C>                  <C>
Revenues:
     Service and support                                               $      1,000         $      1,281
     Connectivity products                                                      380                  806
                                                                       ------------         ------------
                                                                              1,380                2,087
                                                                       ------------         ------------
Expenses:
     Cost of service and support                                                615                  826
     Cost of connectivity products                                              283                  438
     Provision for inventory reserve                                             72                   26
     Selling, general and administrative                                      1,045                1,269
     Product development                                                         54                  337
                                                                       ------------         ------------
                                                                              2,069                2,896
                                                                       ------------         ------------

Operating loss                                                                 (689)                (809)

Other  income (expense):
     Gain on settlement of accounts payable                                     833                   --
     Loan discount amortization                                                  --                 (237)
     Interest expense - affiliates                                              (13)                  (7)
     Interest expense - other                                                   (85)                 (79)
     Other income (expense)                                                      (1)                  (1)
                                                                       ------------         ------------

Income (loss) before income taxes                                                45               (1,133)

Provision for income taxes                                                       --                   --
                                                                       ------------         ------------

Net income (loss)                                                                45               (1,133)

Preferred stock dividend, including beneficial conversion
   amount of $38 in three months ended December 31, 2001                        (23)                 (54)
                                                                       ------------         ------------

Net income (loss) available to common stockholders                     $         22         $     (1,187)
                                                                       ============         ============

Income (loss) per common share - basic and diluted                     $       0.00         $      (0.09)
                                                                       ============         ============

Weighted average shares outstanding - basic and diluted                      15,448               13,752
                                                                       ============         ============
</TABLE>

                 See notes to consolidated financial statements.

                                        4
<PAGE>

                         PART I - FINANCIAL INFORMATION

                          Symbiat, Inc. and Subsidiary
                 (Formerly Computone Corporation and Subsidiary)
                      Consolidated Statements of Operations
                      (in thousands, except per share data)

<TABLE>
<CAPTION>
                                                                          For the nine months ended
                                                                    --------------------------------------
                                                                    December 31, 2002    December 31, 2001
                                                                    -----------------    -----------------
                                                                       (unaudited)
<S>                                                                    <C>                  <C>
Revenues:
     Service and support                                               $      3,296         $      4,452
     Connectivity products                                                    1,213                2,712
                                                                       ------------         ------------
                                                                              4,509                7,164
                                                                       ------------         ------------
Expenses:
     Cost of service and support                                              2,164                2,894
     Cost of connectivity products                                              980                1,659
     Provision for inventory reserve                                            582                  110
     Selling, general and administrative                                      3,405                4,250
     Impairment of goodwill                                                   8,078                   --
     Impairment of certain long-lived assets                                    465                   --
     Product development                                                        448                1,129
                                                                       ------------         ------------
                                                                             16,122               10,042
                                                                       ------------         ------------

Operating loss                                                              (11,613)              (2,878)

Other  income (expense):
     Gain on settlement of accounts payable                                     833                   --
     Loan discount amortization                                                  --                 (692)
     Interest expense - affiliates                                              (38)                 (43)
     Interest expense - other                                                  (248)                (223)
     Other income                                                                 1                    7
                                                                       ------------         ------------

Loss before income taxes                                                    (11,065)              (3,829)

Provision for income taxes                                                       --                   --
                                                                       ------------         ------------

Net loss                                                                    (11,065)              (3,829)

Preferred stock dividend,  including beneficial conversion amount
   of $ 5 and $181 in nine months ended
   December 31, 2002 and December 31, 2001, respectively                        (72)                (219)
                                                                       ------------         ------------

Net loss available to common stockholders                              $    (11,137)        $     (4,048)
                                                                       ============         ============

Loss per common share - basic and diluted                              $      (0.75)        $      (0.31)
                                                                       ============         ============

Weighted average shares outstanding - basic and diluted                      14,934               13,214
                                                                       ============         ============
</TABLE>

                 See notes to consolidated financial statements.

                                        5
<PAGE>

                         PART I - FINANCIAL INFORMATION

                          Symbiat, Inc. and Subsidiary
                 (Formerly Computone Corporation and Subsidiary)
                      Consolidated Statements of Cash Flows
                                 (in thousands)
<TABLE>
<CAPTION>
                                                                          For the nine months ended
                                                                    --------------------------------------
                                                                    December 31, 2002    December 31, 2001
                                                                    -----------------    -----------------
                                                                                 (unaudited)
<S>                                                                    <C>                  <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss                                                             $    (11,065)        $     (3,829)
  Adjustments to reconcile net loss to net cash
     provided by (used in) operations:
       Stock issued for selling, general and adminstrative expenses             276                1,071
       Depreciation and amortization                                            107                  985
       Provision for uncollectible accounts receivable                            9                   27
       Provision for inventory reserve                                          582                  110
       Impairment of goodwill                                                 8,078                   --
       Impairment of certain long-lived assets                                  465                   --
       Provision for lease liability                                          1,052                   --
       Changes in current assets and current liabilities
          Receivables                                                           291                  557
          Inventories                                                           546                  474
          Prepaid expenses and other                                             13                  222
          Accounts payable and accrued liabilities                             (596)                 (59)
                                                                       ------------         ------------
Net cash used in operations                                                    (242)                (442)
                                                                       ------------         ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Capitalization of software costs                                              --                  (98)
   Capital expenditures                                                          (6)                 (39)
                                                                       ------------         ------------
Net cash used in investing activities                                            (6)                (137)
                                                                       ------------         ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from the issuance of debt                                             70                  200
  Repayment of debt                                                             (77)                 (58)
  Net repayments under lines of credit                                          (27)                (525)
  Proceeds from issuance of preferred stock, net of issuance costs               80                  739
  Proceeds from issuance of common stock                                        189                   --
                                                                       ------------         ------------
Net cash provided by financing activities                                       235                  356
                                                                       ------------         ------------

Net increase (decrease) in cash and cash equivalents                            (13)                (223)
Cash and cash equivalents, beginning of year                                     70                  264
                                                                       ------------         ------------
Cash and cash equivalents, end of period                               $         57         $         41
                                                                       ============         ============

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
  Cash paid during the period for:
     Interest                                                          $         77         $        154

SUPPLEMENTAL DISCLOSURES OF NON-CASH FINANCING AND INVESTING ACTIVITIES:
    Preferred stock issued for settlement of accounts payable
      and accrued liabilities                                          $         --         $        100
    Warrants associated with the issuance of preferred stock                     --                   46
    Dividend associated with preferred stock beneficial
      conversion feature                                                          5                  181
    Preferred stock issued for dividends                                         67                   38
    Common stock issued for settlement of debt                                   20                  303
    Common stock issued for settlement of accounts payable                       --                    8
    Common stock issued for selling, general and
      adminstrative expenses                                                    276                1,071
</TABLE>

        See accompanying notes to the consolidated financial statements.

                                        6
<PAGE>

                          SYMBIAT, INC. AND SUBSIDIARY
                 (FOMERLY COMPUTONE CORPORATION AND SUBSIDIARY)
              UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2002 AND 2001

     This  Form-10QSB  Quarterly  Report  contains  certain  statements that are
"forward-looking   statements"  as  that  term  is  defined  under  the  Private
Securities  Litigation Reform Act of 1995, and within the meaning of Section 27A
of the  Securities  Act of 1933, as amended,  and Section 21E of the  Securities
Exchange Act of 1934, as amended. The words "believe,"  "expect,"  "anticipate,"
"intend,"  "estimate,"  "target,"  "may," "will," "plan,"  "project,"  "should,"
"continue," or the negative thereof or other expressions,  which are predictions
of or indicate  future  events and trends and which do not relate to  historical
matters,  identify  forward-looking  statements.  Such  statements  are based on
information available to management as of the time of such statements and relate
to, among other things,  expectations  of the business  environment in which the
Company operates, projections of future performance,  perceived opportunities in
the  market  and  statements   regarding  the  Company's   mission  and  vision.
Forward-looking  statements  involve known and unknown risks,  uncertainties and
other factors,  which may cause the actual results,  performance or achievements
of the Company to differ materially from anticipated future results, performance
or achievements  expressed or implied by such  forward-looking  statements.  The
Company   undertakes   no   obligation   to   publicly   update  or  revise  any
forward-looking statement, whether as a result of new information, future events
or otherwise.

     The future operating  results and performance  trends of the Company may be
affected by a number of factors,  including,  without limitation, the following:
(i) the ability of the Company to obtain and maintain  adequate working capital,
(ii) the ability of the Company to extend the  maturity  dates of its debt (iii)
the ability of the Company to continue as a going  concern,  (iv) the ability of
the Company to fund operations, expand sales volume and sales personnel, (v) the
ability of the  Company to improve  revenue  throughout  the fiscal  2003,  (vi)
future supply and demand for the Company's  products,  (vii) changes in business
and economic  conditions,  (viii)  availability of raw materials and parts, (ix)
the highly competitive  market in which the Company operates,  (x) the Company's
ability to respond to rapidly  developing  changes in its  marketplace  and (xi)
other risks that may be described from time to time in reports the Company files
with the Securities and Exchange Commission ("SEC").

1.   BASIS OF PRESENTATION

     The financial statements included in this Form 10-QSB Quarterly Report have
been  prepared  by  the  Company,  without  audit,  pursuant  to the  rules  and
regulations of the SEC. Certain information and footnote  disclosures,  normally
included in financial  statements prepared in accordance with generally accepted
accounting principles,  have been condensed, or omitted,  pursuant to such rules
and regulations.  These financial  statements should be read in conjunction with
the  financial  statements  and related notes  included in the Company's  Annual
Report on Form 10-KSB for its fiscal year ended March 31, 2002.

     The financial  statements presented herein as of December 31, 2002 reflect,
in the  opinion  of  management,  all  adjustments  (consisting  only of  normal
recurring  adjustments)  necessary for a fair presentation of financial position
and the  results  of  operations  for the  periods  presented.  The  results  of
operations for any interim period are not necessarily  indicative of the results
for the full year.

2.   GOING CONCERN UNCERTAINTY

     The accompanying  consolidated  financial statements as of and for the nine
months ended December 31, 2002 have been prepared assuming that the Company will
continue as a going concern,  which  contemplates  the realization of assets and
the settlement of  liabilities  in the normal course of business.  During fiscal
2002,  the  Company  incurred  net  losses of  $5,262,000,  operating  cash flow
deficiencies  of $781,000,  and as of March 31, 2002,  the Company had a working
capital  deficiency  of  $5,038,000.  As of December 31,  2002,  the Company has
$3,086,000 in outstanding  principal on notes payable that matures during fiscal
2003. In addition,  as of March 31, 2002,  the Company was in default of its 11%
$2,500,000  note payable and, in September  2002, the lender filed notice of its
intent to call the note.  On  October 2, 2002,  the lender  signed a  standstill
agreement  to forego,  until  December 6, 2002,  any further  actions  until the
Company obtains funds from a new lender. The agreement expired

                                        7
<PAGE>

                          SYMBIAT, INC. AND SUBSIDIARY
                 (FOMERLY COMPUTONE CORPORATION AND SUBSIDIARY)
        UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 2002 AND 2001

2.   GOING CONCERN UNCERTAINTY, CONTINUED

on December 6, 2002 without an accord being  reached.  On December 18, 2002, the
Company  and  the  holder  of the 11%  notes  payable  signed  a  memorandum  of
understanding  to extend the  standstill  agreement  until  April 1, 2003 so the
Company could attempt to raise up to $2,000,000 from a rights offering (See Note
14).  Finally,  on October 10,  2002,  the Company  received a service  contract
cancellation  from its largest  customer.  There can be no  assurances  that the
lender will not take legal action to collect  amounts due.  These  matters raise
substantial  doubt about the Company's  ability to continue as a going  concern.
Management's   plans   concerning   these  matters  are  described   below.  The
consolidated  financial  statements  do not include any  adjustments  that might
result from the outcome of this uncertainty.

     During the nine months ended December 31, 2002, the  Connectivity  Products
business  segment had an operating  loss of $3,127,000 on revenue of $1,213,000.
For the same period,  the Service and Support  business segment had an operating
loss of $408,000 (before a $8,078,000  goodwill impairment charge) on revenue of
$3,296,000.  To address  the  continuing  operating  losses in the  Connectivity
Products segment, management has decided to sell certain products and technology
related to the Company's family of remote console products (See Note 13).

     The revenue  during the nine months ended December 31, 2002 for the Service
and Support segment was $3,296,000. Due to the growth potential of this business
segment,   the  company's   primary  focus  will  be  on  expanding   identified
opportunities in the Service and Support segment.

     In order to increase market share in the Service and Support  segment,  the
Company has expanded the areas where its  technicians  are  certified or provide
support services. Certifications have been obtained and the Company has expanded
its offerings to include SUN  Microsystems  hardware,  SUN's  Solaris  Operating
System,  IBM RS6000  hardware and IBM's AIX  Operating  System.  The Company has
already  signed  several  contracts in these new service and support  offerings.
Also, the Company has added  certifications  for maintenance and support of many
RAID disk storage systems and certifications for several other network devices.

     For last several  months,  the Company has been  investing in additions and
enhancements  to its service call software to more  effectively  and efficiently
manage customer  accounts as well as allow for  significant  expansion for depot
repair service.

3.   REVENUE RECOGNITION

     The Company generally  recognizes product revenue upon shipment,  net of an
allowance for sales returns, and service revenue when services are performed. At
these points,  persuasive  evidence of a sale arrangement  exists,  delivery has
occurred  for  product  sales,  the  Company's  price to the  buyer is fixed and
determinable,  and  collectibility  of the  associated  receivable is reasonably
assured.  The Company  receives  non-refundable  advance  payments for operating
system and hardware  support  service  contracts for varying  periods of no more
than three years.  The Company defers these  payments and recognizes  revenue on
these contracts on a straight-line basis over the term of the related contract.

     Software  revenues  are  recognized  based  on  the  guidance  in  American
Institute of Certified Public Accountants  Statement of Position 97-2, "Software
Revenue  Recognition".   The  Company  recognizes  software  revenue  when:  (1)
persuasive  evidence of an arrangement  exists; (2) the system has been shipped;
(3) the fee is  fixed  or  determinable;  and (4)  collectibility  of the fee is
probable. Under multiple element hardware and software arrangements, the Company
allocates  revenue to the various  elements based on objective  evidence of fair
value.

                                        8
<PAGE>

                          SYMBIAT, INC. AND SUBSIDIARY
                 (FOMERLY COMPUTONE CORPORATION AND SUBSIDIARY)
              UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2002 AND 2001

3.   REVENUE RECOGNITION, CONTINUED

     The Company  generally  provides a warranty  of five years on all  products
originally  manufactured  by the  Company.  A warranty  reserve of less than one
percent of sales, to cover the estimated costs of correcting product defects, is
accrued at the date of shipment.

4.   INVENTORIES

     Inventories are valued at the lower of cost or market, with cost determined
on the average cost method.

     Raw materials that have no planned  production  life or exceed 12 months of
anticipated  supply are deemed excess and are fully reserved.  Reserves are also
established as necessary for excess,  obsolete,  and non-salable finished goods.
Inventories are recorded in the accompanying consolidated balance sheet net of a
reserve for excess,  obsolete, and non-salable items of $493,000 and $705,000 at
December  31, 2002 and March 31,  2002,  respectively.  On October 5, 2002,  the
Company reached a settlement with a vendor whereby certain inventory items would
be made available for no additional cash outlay. As a result of this settlement,
the Company  recorded a $599,000  gain on the  settlement  of  liabilities.  The
Company recorded $582,000 and $110,000 of provisions for inventory  obsolescence
and excess inventory  quantities  during the nine months ended December 31, 2002
and December 31, 2001, respectively.

     Inventories,  net of a reserve for obsolete,  excess and non-salable items,
consisted  of the  following  at  December  31,  2002  and  March  31,  2002 (in
thousands):

                                                    DECEBMER 31,   MARCH 31,
                                                        2002         2002
                                                      --------     --------
     Inventories:
       Finished goods                                 $     58     $    313
       Work in process                                      --          134
       Raw materials                                        71          810
                                                      --------     --------
                                                      $    129     $  1,257
                                                      ========     ========

5.   EARNINGS PER SHARE

     Basic  earnings  per share  ("EPS")  excludes  dilution  and is computed by
dividing income (loss) available to common  shareholders by the weighted average
number of common  shares  outstanding  for the period.  Diluted EPS reflects the
potential  dilution that could occur if  securities or other  contracts to issue
common  stock were  exercised or converted  into common  stock.  For purposes of
computing  diluted EPS, the Company  excluded the effects of outstanding  common
stock options, warrants and the conversion of Preferred Stock totaling 4,890,631
and 4,573,066 as of December 31, 2002 and 2001, respectively, as their effect is
anti-dilutive.  As a result of the sale of  Preferred  Stock  (see Note 9),  the
Company paid dividends in Preferred  Stock  totaling  $67,000 and $38,000 during
the nine months  ended  December 31, 2002 and 2001,  respectively,  and recorded
$5,000  and  $181,000  of  dividends   associated  with  the  Preferred  Stock's
beneficial conversion feature during the nine months ended December 31, 2002 and
2001,  respectively.  The beneficial  conversion feature was accounted for as an
increase to accumulated deficit and an increase to additional paid-in capital.

                                        9
<PAGE>

                          SYMBIAT, INC. AND SUBSIDIARY
                 (FOMERLY COMPUTONE CORPORATION AND SUBSIDIARY)
        UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 2002 AND 2001

6.   INCOME TAXES

     At  March  31,  2002,  the  Company  has net  operating  and  capital  loss
carryforwards  totaling  $44,000,000 which expire at various dates through 2016,
including a predecessor company preacquisition operating loss carryforward. As a
result of  several  ownership  changes,  which  have  occurred  since the losses
started  to  accumulate,  statutory  provisions  will  substantially  limit  the
Company's future use of these loss carryforwards.

7.   LONG-TERM DEBT AND LINE OF CREDIT

     On June 28, 2000,  the Company  entered into an agreement  with a lender to
issue a  $2,500,000,  11% note  payable  that became due in  December  2001 (the
"Note")  the  proceeds of which were used to fund an  acquisition  of a business
segment.  In March 2002,  the Company had the Note's  maturity  date extended to
April 29, 2002.  As  consideration  for the  extension,  the Company  issued the
lender 100,000 shares of its common stock. As of March 31, 2002, the Company was
in default of its 11% $2,500,000 note payable and, in September 2002, the lender
filed  notice of its intent to call the note.  On  October  2, 2002,  the lender
signed a standstill  agreement to forego any further  actions  until the Company
closes with another lender. The agreement expired on December 6, 2002 without an
accord being  reached.  On December 18, 2002,  the Company and the holder of the
11% notes payable signed a memorandum of  understanding to extend the standstill
agreement  until  April 1,  2003 so the  Company  could  attempt  to raise up to
$2,000,000  from a rights  offering.  There can be no assurances that the lender
will not take legal  action to  collect  amounts  due.  In  connection  with the
issuance of the Note on June 28, 2000,  the Company issued a warrant to purchase
392,577 shares of its common stock  exercisable at $3.25 per share.  The warrant
is  currently  exercisable  in whole or in part and  expires in June  2003.  The
agreement  called for the warrant exercise price to be adjusted in the event the
Company  issued  any  additional  shares of common  stock,  warrants  or options
exercisable at less than the $3.25 per share price.  Exercise of the warrant may
be either in cash or by  surrender of the warrant to the Company in exchange for
the Company's  common stock equal to the value of the warrants as defined in the
warrant  agreement.  The fair  value of the  warrant of  $1,328,000,  determined
through  the use of the Black  Sholes  valuation  model,  was  accounted  for as
additional  paid-in-capital  (debt discount) and was fully expensed  through the
note's original maturity date in December 2001.

     The Note also includes a cross default  provision  whereby a default on the
Note would occur if the Company was in default of any  covenants of any of their
other financing  arrangements in excess of $50,000.  Effective October 29, 2001,
the Note was subordinated to the Company's  factoring agreement described below.
The Note is guaranteed by the Company and its wholly-owned subsidiary and places
restrictions on the Company's ability to sell its business or its product lines,
incur additional indebtedness,  declare or pay dividends,  consolidate, merge or
sell its business and make investments.

     On  October  29,  2001,  the  Company  entered  into a  $750,000  factoring
agreement with a lender.  The agreement  enables the Company to factor  selected
accounts  receivable  invoices  with the lender with full  recourse  against the
Company and bears interest at prime plus 3% with a minimum  interest rate of 8%.
The Company will factor the selected  invoices for an initial advance of 80% the
total  invoice  balance  and will be  charged a .30% to 3.00%  factoring  charge
depending on the number of days the invoices remain outstanding. At December 31,
2002,  the Company  had  $30,000 in  outstanding  borrowings  leaving  less than
$10,000 available for borrowing under the factoring agreement.

8.   GOODWILL

     In July 2001, the Financial  Accounting  Standards  Board  ("FASB")  issued
Statement of Financial  Accounting  Standards No. ("SFAS") 142,  "Accounting for
Goodwill and Other  Intangible  Assets",  effective  for fiscal years  beginning
after  December 15, 2001.  SFAS 142  establishes  new  accounting  standards for
goodwill and

                                       10
<PAGE>

                          SYMBIAT, INC. AND SUBSIDIARY
                 (FOMERLY COMPUTONE CORPORATION AND SUBSIDIARY)
        UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 2002 AND 2001

8.   GOODWILL, CONTINUED

continues to require the recognition of goodwill as an asset but does not permit
amortization of goodwill as previously  required by Accounting  Principles Board
Opinion No. ("APB") 17,  "Intangible  Assets".  SFAS 142 also  establishes a new
method of testing goodwill for impairment. It requires goodwill to be separately
tested  for  impairment  at a  reporting  unit  level.  The  amount of  goodwill
determined to be impaired would be expensed to current  operations.  As of April
1, 2001,  the Company  adopted SFAS No. 142. The  provisions of this  accounting
standard also require the  completion of a transitional  impairment  test within
nine months of adoption, with any impairments identified treated as a cumulative
effect of a change in accounting principle. The Company performed a transitional
fair value based  impairment  test on its goodwill and determined  that the fair
value exceeded the recorded value at April 1, 2001. In accordance  with SFAS No.
142, the Company  discontinued the  amortization of goodwill  effective April 1,
2001. The Company elected March 31 as the date to perform its annual  impairment
test  under  provisions  of SFAS 142 and  performed  such a test as of March 31,
2002.  As a result,  the  Company  completed  the test as of March 31,  2002 and
determined that there was no impairment of recorded  goodwill at that date. SFAS
142 states that goodwill  should be tested for  impairment  between  annual test
dates if events  occur or  circumstances  change that would more likely than not
reduce  the fair  value  below  its  carrying  amount.  The loss of its  largest
customer  and well as the  notice  from a lender  of its  intent  to call a note
currently  in default  caused the  Company to  evaluate  recorded  goodwill  for
impairment.  The  conclusion  of these  evaluations  was  that  the  fair  value
associated  with the  Service and Support  segment  could no longer  support the
associated  goodwill.  As a result,  the Company  recorded an impairment loss of
$8.1 million in the three months ended September 30, 2002.

9.   REDEEMABLE CONVERTIBLE PREFERRED STOCK AND COMMON STOCK

     In March 2001, the Company's board of directors  authorized the issuance of
up to  400,000  shares  of  its  Preferred  Stock.  The  Preferred  Stock  has a
liquidation  preference of $10 per share plus accrued but unpaid dividends.  The
Preferred  Stock  provides for dividends  equal to $.60 per share per annum paid
quarterly  commencing June 30, 2001,  increasing to $.80 per share per annum 120
days  after  issuance  of the  Preferred  Stock  if  the  shares  issuable  upon
conversion to common stock are not then  registered  for resale and remaining at
$.80 per share until such common stock is registered. Between March 31, 2001 and
February 28, 2003,  the Company has the option to pay dividends in shares of the
Company's  Preferred  Stock at $10 per share.  Dividends are cumulative and have
preference  over payments on any of the Company's other equity  securities.  The
final  dividend of the Company's  Preferred  Stock was completed as of the three
months ended December 31, 2002 (See Note 14).

     Each share of Preferred Stock is convertible  upon issuance,  at the option
of the  holder,  into 17  shares  of the  Company's  common  stock,  subject  to
adjustment  as provided in the  certificate  of  designation  for the  Preferred
Stock.  Each share of Preferred  Stock has voting  rights equal to the number of
common shares on an as converted basis.

     The Company has the option to redeem the Preferred Stock  commencing  March
1, 2003 for $11.50 per share,  March 1, 2004 for $11.00 per share, March 1, 2005
for $10.50 per share, and March 1, 2006 and thereafter for $10.00 per share. The
Company  also has the option to redeem the  Preferred  Stock at $10.00 per share
commencing  one year after  issuance if the fair value of the  Company's  common
stock equals or exceeds  $2.00 for any 20  consecutive  days  subsequent to that
date and the shares issuable upon conversion are  registered.  In addition,  the
Preferred  Stock  holders  have the option to require  the Company to redeem the
Preferred  Stock upon a change of control if the market  value of the  Company's
common  stock is less than the  Conversion  Price,  as defined in the  Preferred
Stock agreement, for $11.50 per share.

     During June 2002, the Company issued 8,000 shares of Preferred Stock valued
at $80,000 for cash proceeds of $80,000.  During the nine months ended  December
31, 2002, the Company  issued 15,807 shares of Preferred  Stock to pay dividends
earned  during that  period.  The issuance of  Preferred  Stock  resulted in the
Company recording $5,000 and $181,000 in dividends associated with the Preferred
Stock's beneficial conversion feature

                                       11
<PAGE>

                          SYMBIAT, INC. AND SUBSIDIARY
                 (FOMERLY COMPUTONE CORPORATION AND SUBSIDIARY)
        UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 2002 AND 2001

9.   REDEEMABLE CONVERTIBLE PREFERRED STOCK AND COMMON STOCK, CONTINUED

during the three months  ended  December  31, 2002 and 2001,  respectively.  The
beneficial  conversion  feature was accounted for as an increase to  accumulated
deficit and an increase to additional paid-in capital.

     During the nine months ended  December 31, 2002,  the Company issued 30,000
shares of common stock  valued at $5,000 for  consulting  services.  The Company
recorded the expense in the period the shares were issued.  The consultant,  who
happens to be a member on the  Company's  board of  directors  and,  on July 15,
2002, became its chairman,  provides services concerning management,  marketing,
consulting,  strategic planning, corporate organization and structure, financial
matters  in  connection  with the  operation  of the  business  of the  Company,
expansion of services, acquisitions and business opportunities, and shall review
and advise the Company  regarding  its overall  progress,  needs and  condition.
During the three months ended  December 31,  2002,  the Company  issued  754,600
shares of common stock valued at $243,000 to seven vendors for selling,  general
and  administrative  expenses.  During the three months ended December 31, 2002,
the Company  issued  1,052,500  shares of its common stock for $105,000 in cash.
Also during the three months ended December 31, 2002, the Company issued 200,000
shares of common stock valued at $20,000 for the settlement of notes payable.

10.  NEW ACCOUNTING PRONOUNCEMENTS

     In  August  2001,  the  FASB  issued  SFAS  No.  144,  "Accounting  for the
Impairment  or Disposal  of  Long-Lived  Assets".  The  pronouncement  addresses
financial  accounting and reporting for the impairment or disposal of long-lived
assets  and  supersedes  SFAS No. 121 and APB  Opinion  No.  30.  However,  this
Statement  retains  the  requirement  of  Opinion  30  to  report   discontinued
operations separately from continuing operations and extends that reporting to a
component  of  an  entity  that  either  has  been  disposed  of  (by  sale,  by
abandonment,  or in a distribution to owners) or is classified as held for sale.
This  statement is effective  for the  Company's  financial  statements  for the
period  beginning  April 1,  2002,  with  earlier  application  encouraged.  The
provisions of this new statement generally are to be applied prospectively.  The
impact on the Company's  consolidated  financial statements was that the Company
recorded  a  $465,000  write  down  for the net book  value of the  Connectivity
Products long-lived assets,  principally  property and equipment and capitalized
software costs.

     In July  2002,  the  FASB  issued  SFAS  No.  146,  "Accounting  for  Costs
Associated  with Exit or  Disposal  Activities",  which  requires  companies  to
recognize  costs  associated  with  exit or  disposal  activities  when they are
incurred  rather than at the date of a commitment  to an exit or disposal  plan.
SFAS No.  146 is to be  applied  prospectively  to exit or  disposal  activities
initiated  after  December 31, 2002.  The Company has reviewed the provisions of
SFAS No. 146 and will apply its  provisions  as exit and disposal  decisions are
made.

     In November 2002, FASB Interpretation No. 45,  "Guarantor's  Accounting and
Disclosure  Requirements  for  Guarantees,   Including  Indirect  Guarantees  of
Indebtedness of Others" ("FIN 45") was issued. This interpretation elaborates on
the  disclosures  to be made by a guarantor in its interim and annual  financial
statements about its obligations under certain guarantees that it has issued. It
also  clarifies  that a guarantor is required to recognize at the inception of a
guarantee,  a  liability  for the fair  value of the  obligation  undertaken  in
issuing the guarantee.  The disclosure  requirements of FIN 45 are effective for
financial  statements  of interim or annual  periods  ending after  December 15,
2002. The initial  recognition and initial  measurement  provisions of FIN45 are
applicable  on a  prospective  basis to  guarantees  issued  or  modified  after
December 31, 2002.

     In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based
Compensation--Transition  and  Disclosure,  an amendment of FASB  Statement  No.
123."  SFAS  No.  148  amends  SFAS  No.  123,   "Accounting   for   Stock-Based
Compensation,"  to provide  alternative  methods of  transition  for a voluntary
change to the fair value based method of  accounting  for  stock-based  employee
compensation.  In addition,  SFAS No. 148 amends the disclosure  requirements of
SFAS No. 123 to require prominent disclosures in both annual and interim

                                       12
<PAGE>

                          SYMBIAT, INC. AND SUBSIDIARY
                 (FOMERLY COMPUTONE CORPORATION AND SUBSIDIARY)
        UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 2002 AND 2001

10.  NEW ACCOUNTING PRONOUNCEMENTS, CONTINUED

financial  statements  about the method of accounting for  stock-based  employee
compensation  and the  effect  of the  method  used  on  reported  results.  The
disclosure  provisions  of SFAS No. 148 are  effective  beginning in the quarter
ended March 29, 2003 The Company has  reviewed the  provisions  of SFAS No. 148,
and believes  that upon  adoption,  the  Statement  will not have a  significant
effect on its consolidated financial statements.

11.  SEGMENT INFORMATION

     The Company  identifies  its  reportable  segments  based on the  segment's
product  offerings.  Segment  information  for the three and nine  months  ended
December 31, 2002 and 2001, respectively, is as follows:

                                        Connectivity    Service     Consolidated
                                          Products    and Support      Totals
                                         -----------  ------------- ------------

     THREE MONTHS ENDED DECEMBER 31, 2002
     Revenue                               $   380      $ 1,000       $ 1,380
     Operating income (loss)                  (378)        (311)         (689)
     Total assets                              224          267           491

     NINE MONTHS ENDED DECEMBER 31, 2002
     Revenue                               $ 1,213      $ 3,296       $ 4,509
     Operating income (loss)                (3,127)      (8,486)      (11,613)
     Total assets                              224          267           491

     THREE MONTHS ENDED DECEMBER 31, 2001
     Revenue                               $   806      $ 1,281       $ 2,087
     Operating income (loss)                  (893)          84          (809)
     Total assets                            2,329        8,851        11,180

     NINE MONTHS ENDED DECEMBER 31, 2001
     Revenue                               $ 2,712      $ 4,452       $ 7,164
     Operating income (loss)                (3,448)         570        (2,878)
     Total assets                            2,329        8,851        11,180

12.  CONTINGENCIES AND RELATED PARTY TRANSACTIONS

     On January 22, 2002, the SEC issued an interpretive  release on disclosures
related  to  liquidity  and  capital  resources,   including  off-balance  sheet
arrangements.  The Company does not have material off-balance sheet arrangements
or related  party  transactions.  The  Company is not aware of factors  that are
reasonably  likely to adversely  affect  liquidity  trends,  other than the risk
factors presented in this and other Company filings with the SEC.  However,  the
following  additional  information  is  provided to assist  financial  statement
users.

OPERATING   LEASES  -  These  leases   generally   are  entered  into  only  for
non-strategic  investments (e.g., warehouse and office space) where the economic
profile is favorable.  In August 2002, the Company defaulted on the lease of its
primary  office space and moved out of such space.  At the time, the Company had
$1,052,000 due in remaining payments on this building lease and has accrued this
amount in the  accompanying  financial  statements.  The Company is currently in
negotiations with the landlord to settle the remaining obligations.  The Company
has  $1,075,000  due on leases  through  2008 for its new office  and  warehouse
space.

                                       13
<PAGE>

                          SYMBIAT, INC. AND SUBSIDIARY
                 (FOMERLY COMPUTONE CORPORATION AND SUBSIDIARY)
        UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 2002 AND 2001

12.  CONTINGENCIES AND RELATED PARTY TRANSACTIONS, CONTINUED

PURCHASE  COMMITMENTS  - The Company has  purchase  commitments  for  materials,
supplies,  services,  and property,  plant and equipment as part of the ordinary
conduct of business.  In the aggregate,  such  commitments  are not at prices in
excess of current  markets.  The Company does not believe such  commitments will
have a materially adverse affect on the Company.

LEGAL PROCEEDINGS - On October 15, 2002,  Darrin Sherrill,  the Company's former
general  manager,  filed an action  against the Company in the Superior Court of
Forsyth  County,  Georgia  asserting  that the Company  breached his  employment
agreement,  conspired to obstruct Mr.  Sherrill's  registration of the Company's
common stock, and defamed Mr. Sherrill to the Company's employees.  Mr. Sherrill
seeks an unspecified amount of damages. On October 25, 2002, the Company filed a
counterclaim  against Mr.  Sherrill  in the  Superior  Court of Forsyth  County,
Georgia asserting that Mr. Sherrill  improperly induced the Company's  customers
and employees to end their  relationships with the Company and join Mr. Sherrill
in his new venture. Additionally, the Company asserted that Mr. Sherrill plotted
to  misappropriate  the Company's  trade secrets and proprietary  software.  The
Company seeks an  unspecified  amount of damages.  It is presently the intent of
the Company's management to move toward a settlement of these matters. There can
be no assurance the Company will not be adversely affected by these proceedings.

OTHER  CONTRACTUAL  OBLIGATIONS - The Company does not have  material  financial
guarantees  or other  contractual  commitments  that are  reasonably  likely  to
adversely affect liquidity. However, the Company does have a contingent purchase
price provision  associated with the prior acquisition of Multi-User  Solutions,
Ltd.   ("Multi-User").   The  merger   consideration   paid  to  the  Multi-User
shareholders  is subject to increase by up to  $1,500,000,  payable half in cash
and half in the Company's common stock, contingent upon Multi-User's achievement
of specified performance  objectives through June 2003. Based on results through
December 31, 2002,  management  believes that is unlikely that  Multi-User  will
achieve these performance objectives.

RELATED PARTY TRANSACTIONS - During the nine months ended December 31, 2002, the
Company  issued  common stock  valued at $38,000 for  consulting  services.  The
consultant  happens to be a member on the Company's  board of directors  and, on
July 15, 2002, became its chairman.  At December 31, 2002, the Company had notes
payable  due to  shareholders  of  $413,000.  The Company  incurred  $38,000 and
$43,000 in interest  expense on related party notes payables for the nine months
ending December 31, 2002 and 2001, respectively.

13.  SALE OF CERTAIN PRODUCTS AND TECHNOLOGY

     On June 17, 2002, the Company announced it had signed a letter of intent to
sell certain  technology and products from its  Connectivity  Products  business
segment to Raritan Computer, Inc ("Raritan"). Under the purchase contemplated by
the letter of intent,  Raritan would  acquire the rights to produce,  market and
advance certain  technology and products  related to the Company's new family of
Remote Console  Management  ("RCM") devices and  potentially  other products and
software. On August 2, 2002, the Company announced that it was unable to reach a
definitive agreement with Raritan.

     On January 30, 2003, the Company signed an asset purchase agreement to sell
certain technology and products from its Connectivity  Products business segment
to Altura XL, LLC ("Altura").  Under the asset purchase agreement, Altura agreed
to pay the Company  $102,500 and  acquired all right,  title and interest in the
Company's RAS2000 product line.

     The Company's primary focus will be on expanding  identified  opportunities
in its Service and Support business segment.

                                       14
<PAGE>

                          SYMBIAT, INC. AND SUBSIDIARY
                 (FOMERLY COMPUTONE CORPORATION AND SUBSIDIARY)
        UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 2002 AND 2001

14.  SUBSEQUENT EVENTS

     In January  2003,  the  company  initiated  a vote of the  Preferred  Stock
shareholders  to amend its certificate of designation to eliminate the Preferred
Stock dividend.  The Company's articles of incorporation  require an affirmative
vote of the 60% of the Preferred Stock  shareholders to amend its certificate of
designation.  On January 31, 2003, the Company officially collected 73.55% votes
in the affirmative.  In consideration  for the elimination of the dividend,  the
Preferred Stock conversion rate has been changed from seventeen shares of common
stock for each share of Preferred Stock to thirty-three  and one-third shares of
Common Stock for each share of Preferred Stock.

     On February 3, 2003, the Company  announced a shareholder  Rights  Offering
Program.  Under the  Program,  current  shareholders  are  entitled  to purchase
additional  shares of the Company's  common stock on a 1 for 3 basis at $.30 per
share.  The primary intents of this Rights Offering is to raise up to $2,000,000
in order to reduce the Company's  debt (and the related  interest  expenses) and
provide working capital for the  implementation of operating  efficiencies.  The
Company's  primary  lender has agreed to extend  the  maturity  date of its $2.5
million loan for an additional two years,  to April 1, 2005, upon the successful
completion of this Rights Offering.  The Company understands that the success of
this Rights Offering Program is not guaranteed. A minimum level of participation
is  required,  and failure to reach that  threshold  may cause the program to be
cancelled.


ITEM 2.   MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OF  FINANCIAL  CONDITION  AND
          RESULTS OF OPERATIONS

     This  Form-10QSB  Quarterly  Report  contains  certain  statements that are
"forward-looking   statements"  as  that  term  is  defined  under  the  Private
Securities  Litigation Reform Act of 1995, and within the meaning of Section 27A
of the  Securities  Act of 1933, as amended,  and Section 21E of the  Securities
Exchange Act of 1934, as amended. The words "believe,"  "expect,"  "anticipate,"
"intend,"  "estimate,"  "target,"  "may," "will," "plan,"  "project,"  "should,"
"continue," or the negative thereof or other expressions,  which are predictions
of or indicate  future  events and trends and which do not relate to  historical
matters,  identify  forward-looking  statements.  Such  statements  are based on
information available to management as of the time of such statements and relate
to, among other things,  expectations  of the business  environment in which the
Company operates, projections of future performance,  perceived opportunities in
the  market  and  statements   regarding  the  Company's   mission  and  vision.
Forward-looking  statements  involve known and unknown risks,  uncertainties and
other factors,  which may cause the actual results,  performance or achievements
of the Company to differ materially from anticipated future results, performance
or achievements  expressed or implied by such  forward-looking  statements.  The
Company   undertakes   no   obligation   to   publicly   update  or  revise  any
forward-looking statement, whether as a result of new information, future events
or otherwise.

     The future operating  results and performance  trends of the Company may be
affected by a number of factors,  including,  without limitation, the following:
(i) the ability of the Company to obtain and maintain  adequate working capital,
(ii) the ability of the Company to extend the  maturity  dates of its debt (iii)
the ability of the Company to continue as a going  concern,  (iv) the ability of
the Company to fund operations, expand sales volume and sales personnel, (v) the
ability of the  Company to improve  revenue  throughout  the fiscal  2003,  (vi)
future supply and demand for the Company's  products,  (vii) changes in business
and economic  conditions,  (viii)  availability of raw materials and parts, (ix)
the highly competitive  market in which the Company operates,  (x) the Company's
ability to respond to rapidly  developing  changes in its  marketplace  and (xi)
other risks that may be described from time to time in reports the Company files
with the Securities and Exchange Commission ("SEC").

RESULTS OF OPERATIONS
---------------------

THREE MONTHS ENDED DECEMBER 31, 2002 COMPARED TO THE THREE MONTHS ENDED DECEMBER
--------------------------------------------------------------------------------
31, 2001
--------

     During the three months ended December 31, 2002, the Company had net income
of  $45,000  on net sales of  $1,380,000  compared  to a net loss of  $1,133,000
during the three months ended December 31, 2001 on net sales of $2,087,000.

     Net sales from the Service and Support  segment  decreased from  $1,281,000
during the three months ended  December 31, 2001 to $1,000,000  during the three
months ended December 31, 2002. This decrease is primarily due to lower sales to
the Company's largest  customer.  Net sales of Connectivity  Products  decreased
from $806,000 during the three months ended December 31, 2001 to $380,000 during
the three months ended December 31, 2002.

                                       15
<PAGE>

                          SYMBIAT, INC. AND SUBSIDIARY
                 (FOMERLY COMPUTONE CORPORATION AND SUBSIDIARY)
        UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 2002 AND 2001

The Company  continues to  experience a decline in sales of its legacy  products
resulting in reduced revenues due to erosion in the asynchronous product market.

     Cost of sales for Service and Support totaled  $615,000,  or 62% of Service
and Support revenue (38% gross margin),  for the three months ended December 31,
2002  compared to  $826,000,  or 65% of Service and Support  revenue  (35% gross
margin),  for the three months ended  December 31, 2001.  This  segment's  gross
margin is dependent on product costs,  product or service mix, and vendor costs,
all of which  fluctuate  from period to period.  Cost of  Connectivity  Products
totaled $283,000,  or 74% of Connectivity  Product sales (26% gross margin), for
the three  months  ended  December  31,  2002  compared to  $438,000,  or 54% of
Connectivity  Product  sales  (46% gross  margin),  for the three  months  ended
December  31,  2001.  The decrease in gross margin in the current year period on
Connectivity  Products compared to the prior year period is primarily due to the
continuation  of certain fixed operating costs that were not affected by the 53%
reduction in product sales revenues.  The Company  recorded  $72,000 and $26,000
reserves for inventory  obsolescence and excess inventory during the three month
ended December 31, 2002 and December 31, 2001, respectively.

     Selling,  general and administrative  ("SGA") expenses for the three months
ended December 31, 2002 totaled $1,045,000  compared to $1,269,000 for the three
months  ended  December  31,  2001.  SGA  expenses  for Service and Support were
$696,000 for the three months ended  December 31, 2002  compared to $371,000 for
the three months ended December 31, 2001. This increase of $325,000,  or 88%, is
the result of increased  compensation costs, legal expenses and consultant fees.
SGA  expenses  related to  Connectivity  Products  decreased  from  $898,000  to
$349,000,  or 61%, in the current year's  three-month  period.  This decrease is
attributable to the Company's cost containment  efforts and a $216,000  non-cash
charge the Company  recorded for the issuance of 268,000  shares of common stock
for consulting  services during the three months ended December 31, 2001.  These
factors were partially offset by a $243,000 non-cash charge the Company recorded
for the issuance of 754,600 shares of common stock for  consulting  services and
legal expenses during the three months ended December 31, 2002.

     Product  development  costs  charged to expense for the three  months ended
December  31,  2002  totaled  $54,000,  or 4% of total net  sales,  compared  to
$337,000,  or 41% of total net sales for the three month period  ended  December
31,  2001.  The decrease of $283,000,  or 84%, is  primarily  due the  Company's
decreased compensation costs and other cost containment efforts.

     During the three months  ended  December  31,  2002,  the Company  recorded
$833,000 gain from the  settlement  of $900,000 of accounts  payable and accrued
liabilities for cash payments  totaling  $67,000.  During the three months ended
December 31, 2001, the Company expensed  $237,000 related to amortization of the
discount  on the  11%,  $2,500,000  note  payable.  The  discount  became  fully
amortized during December 2001. Interest expense charged by others for the three
months ended December 31, 2002 totaled $85,000 compared to $79,000 for the three
months ended December 31, 2001.

NINE MONTHS ENDED  DECEMBER 31, 2002 COMPARED TO THE THREE MONTHS ENDED DECEMBER
--------------------------------------------------------------------------------
31, 2001
--------

     During the nine months ended December 31, 2002, the Company  incurred a net
loss of  $11,299,000  on net  sales  of  $4,509,000  compared  to a net  loss of
$3,829,000  during the three  months  ended  December  31,  2001 on net sales of
$7,164,000.

     Net sales from Service and Support segment decreased from $4,452,000 during
the nine months  ended  December 31, 2001 to  $3,296,000  during the nine months
ended  December 31, 2002.  This  decrease is primarily due to lower sales to the
Company's  largest  three  customers.  The  Company has signed  several  service
contracts with new customers in an effort to replace these  billings.  Net sales
of Connectivity Products decreased from $2,712,000

                                       16
<PAGE>

                          SYMBIAT, INC. AND SUBSIDIARY
                 (FOMERLY COMPUTONE CORPORATION AND SUBSIDIARY)
        UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 2002 AND 2001

during the nine months  ended  December 31, 2001 to  $1,213,000  during the nine
months ended December 31, 2002. The Company continues to experience a decline in
sales of its legacy products resulting in reduced revenues due to erosion in the
asynchronous product market.

     Cost of sales for Service and Support totaled $2,164,000, or 66% of Service
and Support  revenue (34% gross margin),  for the nine months ended December 31,
2002 compared to  $2,894,000,  or 65% of Service and Support  revenue (35% gross
margin),  for the nine months  ended  December 31, 2001.  This  segment's  gross
margin is dependent on product costs,  product or service mix, and vendor costs,
all of which  fluctuate  from period to period.  Cost of  Connectivity  Products
totaled $980,000,  or 81% of Connectivity  Product sales (19% gross margin), for
the nine months  ended  December  31, 2002  compared  to  $1,659,000,  or 61% of
Connectivity  Product  sales  (39%  gross  margin),  for the nine  months  ended
December  31,  2001.  The decrease in gross margin in the current year period on
Connectivity  Products compared to the prior year period is primarily due to the
continuation  of certain fixed operating costs that were not affected by the 55%
reduction in product sales revenues.  The Company recorded $582,000 and $110,000
reserves for inventory  obsolescence  and excess inventory during the nine month
ended December 31, 2002 and December 31, 2001, respectively.

     SGA expenses for the nine months ended December 31, 2002 totaled $3,405,000
compared to $4,250,000 for the nine months ended December 31, 2001. SGA expenses
for Service and Support were  $1,541,000  for the nine months ended December 31,
2002  compared to $988,000  for the nine months ended  December  31, 2001.  This
increase of $553,000, or 57%, is the result of result of increased  compensation
costs,  legal expenses and consultant fees. SGA expenses related to Connectivity
Products from $3,262,000 to $1,864,000, or 43%, in the current year's nine-month
period.  This decrease is attributable to the Company's cost containment efforts
and a  $1,071,000  non-cash  charges the Company  recorded  for the  issuance of
868,000  shares of common stock for consulting  services  during the nine months
ended December 31, 2001.  These factors were  partially  offset by an accrual of
$1,052,000 for the remaining payments on the Company's building lease, which was
abandoned in September 2002 and a $243,000  non-cash charge the Company recorded
for the issuance of 754,600 shares of common stock for  consulting  services and
legal expenses during the three months ended December 31, 2002.

     During the nine months ended  December 31,  2002,  the Company  recorded an
$8,078,000 charge for goodwill impairment in accordance with FASB 142.

     During the nine months ended  December 31, 2002,  the Company wrote off the
net book value of its Connectivity Products long-lived assets in accordance with
FASB  144.  The write off  totaled  $465,000  for that  segment's  property  and
equipment and capitalized software costs.

     Product  development  costs  charged to expense for the nine  months  ended
December  31,  2002  totaled  $448,000,  or 10% of total net sales,  compared to
$1,129,000,  or 16% of total net sales for the nine month period ended  December
31,  2001.  The decrease of $681,000,  or 60%, is  primarily  due the  Company's
decreased compensation costs and other cost containment efforts.

     During the three months  ended  December  31,  2002,  the Company  recorded
$833,000 gain from the  settlement  of $900,000 of accounts  payable and accrued
liabilities  for cash payments  totaling  $67,000.  During the nine months ended
December 31, 2001, the Company expensed  $692,000 related to amortization of the
discount  on the  11%,  $2,500,000  note  payable.  The  discount  became  fully
amortized during December 2001.  Interest expense charged by others for the nine
months ended  December 31, 2002  totaled  $248,000  compared to $223,000 for the
nine months ended December 31, 2001.

                                       17
<PAGE>

                          SYMBIAT, INC. AND SUBSIDIARY
                 (FOMERLY COMPUTONE CORPORATION AND SUBSIDIARY)
        UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 2002 AND 2001

LIQUIDITY AND CAPITAL RESOURCES
-------------------------------

     The accompanying  consolidated  financial statements as of and for the nine
months ended December 31, 2002 have been prepared assuming that the Company will
continue as a going concern,  which  contemplates  the realization of assets and
the settlement of  liabilities  in the normal course of business.  During fiscal
2002,  the  Company  incurred  net  losses of  $5,262,000,  operating  cash flow
deficiencies  of $781,000,  and as of March 31, 2002,  the Company had a working
capital  deficiency  of  $5,038,000.  As of December 31,  2002,  the Company has
$3,106,000 in outstanding  principal on notes payable that matures during fiscal
2003. In addition,  as of March 31, 2002,  the Company was in default of its 11%
$2,500,000  note payable and, in September  2002, the lender filed notice of its
intent to call the note.  On  October 2, 2002,  the lender  signed a  standstill
agreement  to forego,  until  December 6, 2002,  any further  actions  until the
Company  obtains funds from a new lender.  The agreement  expired on December 6,
2002 without an accord being reached.  On December 18, 2002, the Company and the
holder of the 11% notes payable signed a memorandum of  understanding  to extend
the standstill agreement until April 1, 2003 so the Company can attempt to raise
up to  $2,000,000  from  a  rights  offering  (See  Note  14).  There  can be no
assurances  that the lender will not take legal  action to collect  amounts due.
These matters raise substantial doubt about the Company's ability to continue as
a going  concern.  Management's  plans  concerning  these  matters are described
below. The consolidated financial statements do not include any adjustments that
might result from the outcome of this uncertainty.

     During the nine months ended December 31, 2002, the  Connectivity  Products
business  segment had an operating  loss of $3,127,000 on revenue of $1,213,000.
For the same period,  the Service and Support  business segment had an operating
loss of $408,000 (before a $8,078,000  goodwill impairment charge) on revenue of
$3,296,000.  To address  the  continuing  operating  losses in the  Connectivity
Products segment, management has decided to sell certain products and technology
related to the Company's family of remote console products (See Note 13).

     The revenue  during the nine months ended December 31, 2002 for the Service
and Support segment was $3,296,000. Due to the growth potential of this business
segment,   the  company's   primary  focus  will  be  on  expanding   identified
opportunities in the Service and Support segment.

     In order to increase market share in the Service and Support  segment,  the
Company has expanded the areas where its  technicians  are  certified or provide
support services. Certifications have been obtained and the Company has expanded
its offerings to include SUN  Microsystems  hardware,  SUN's  Solaris  Operating
System,  IBM RS6000  hardware and IBM's AIX  Operating  System.  The Company has
already  signed  several  contracts in these new service and support  offerings.
Also, the Company has added  certifications  for maintenance and support of many
RAID disk storage systems and certifications for several other network devices.

     For last several  months,  the Company has also been investing in additions
and   enhancements  to  its  service  call  software  to  more  effectively  and
efficiently manage customer accounts as well as allow for significant  expansion
for depot repair service.

     Cash used by  operating  activities  amounted to  $242,000  during the nine
months ended December 31, 2002 compared to cash used by operating  activities of
$442,000  during the nine months ended  December 31, 2001. A portion of the cash
consumed by  operating  losses for the nine months  ended  December 31, 2002 was
offset by increases in accounts payable and accrued liabilities.

     Cash used in investing activities amounted to $6,000 during the nine months
ended  December  31, 2002  compared to cash used of $137,000 for the nine months
ended December 31, 2001.

                                       18
<PAGE>

                          SYMBIAT, INC. AND SUBSIDIARY
                 (FOMERLY COMPUTONE CORPORATION AND SUBSIDIARY)
        UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 2002 AND 2001

     Cash provided by financing  activities amounted to $235,000 during the nine
months ended December 31, 2002 compared to cash provided by financing activities
of $356,000 during the nine months ended December 31, 2001. The Company had cash
inflows from the issuance of debt, preferred and common stock.

     Working  capital  deficit  amounted  to  $7,012,000  at  December  31, 2002
compared to $5,038,000 at March 31, 2002. The ratio of current assets to current
liabilities  at December  31, 2002 was 0.06 to 1.00  compared to 0.27 to 1.00 at
March 31, 2002.

COMMITMENTS AND CONTINGENCIES
-----------------------------

     On January 22, 2002, the SEC issued an interpretive  release on disclosures
related  to  liquidity  and  capital  resources,   including  off-balance  sheet
arrangements.  The Company does not have material off-balance sheet arrangements
or related  party  transactions.  The  Company is not aware of factors  that are
reasonably  likely to adversely  affect  liquidity  trends,  other than the risk
factors presented in this and other Company filings with the SEC.  However,  the
following  additional  information  is  provided to assist  financial  statement
users.

OPERATING   LEASES  -  These  leases   generally   are  entered  into  only  for
non-strategic  investments (e.g., warehouse and office space) where the economic
profile is favorable.  In August 2002, the Company defaulted on the lease of its
primary  office space and moved out of such space.  At the time, the Company had
$1,052,000 due in remaining payments on this building lease and has accrued this
amount in the  accompanying  financial  statements.  The Company is currently in
negotiations with the landlord to settle the remaining obligations.  The Company
has  $1,075,000  due on leases  through  2008 for its new office  and  warehouse
space.

PURCHASE  COMMITMENTS  - The Company has  purchase  commitments  for  materials,
supplies,  services,  and property,  plant and equipment as part of the ordinary
conduct of business.  In the aggregate,  such  commitments  are not at prices in
excess of current  markets.  The Company does not believe such  commitments will
have a materially adverse affect on the Company.

LEGAL PROCEEDINGS - On October 15, 2002,  Darrin Sherrill,  the Company's former
general  manager,  filed an action  against the Company in the Superior Court of
Forsyth  County,  Georgia  asserting  that the Company  breached his  employment
agreement,  conspired to obstruct Mr.  Sherrill's  registration of the Company's
common stock, and defamed Mr. Sherrill to the Company's employees.  Mr. Sherrill
seeks an unspecified amount of damages. On October 25, 2002, the Company filed a
counterclaim  against Mr.  Sherrill  in the  Superior  Court of Forsyth  County,
Georgia asserting that Mr. Sherrill  improperly induced the Company's  customers
and employees to end their  relationships with the Company and join Mr. Sherrill
in his new venture. Additionally, the Company asserted that Mr. Sherrill plotted
to  misappropriate  the Company's  trade secrets and proprietary  software.  The
Company seeks an  unspecified  amount of damages.  It is presently the intent of
the Company's management to move toward a settlement of these matters. There can
be no assurance the Company will not be adversely affected by these proceedings.

OTHER  CONTRACTUAL  OBLIGATIONS - The Company does not have  material  financial
guarantees  or other  contractual  commitments  that are  reasonably  likely  to
adversely affect liquidity. However, the Company does have a contingent purchase
price provision  associated with the prior acquisition of Multi-User  Solutions,
Ltd.   ("Multi-User").   The  merger   consideration   paid  to  the  Multi-User
shareholders  is subject to increase by up to  $1,500,000,  payable half in cash
and half in the Company's common stock, contingent upon Multi-User's achievement
of specified performance  objectives through June 2003. Based on results through
December 31, 2002,  management  believes that is unlikely that  Multi-User  will
achieve these performance objectives.

                                       19
<PAGE>

                          SYMBIAT, INC. AND SUBSIDIARY
                 (FOMERLY COMPUTONE CORPORATION AND SUBSIDIARY)
        UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           DECEMBER 31, 2002 AND 2001

RELATED PARTY TRANSACTIONS - During the nine months ended December 31, 2002, the
Company  issued  common stock  valued at $38,000 for  consulting  services.  The
consultant  happens to be a member on the Company's  board of directors  and, on
July 15, 2002, became its chairman.  At December 31, 2002, the Company had notes
payable  due to  shareholders  of  $413,000.  The Company  incurred  $38,000 and
$43,000 in interest  expense on related party notes payables for the nine months
ending December 31, 2002 and 2001, respectively.

ITEM 3.   CONTROLS AND PROCEDURES

(a)  Evaluation  of disclosure  controls and  procedures.  The  Company's  chief
executive   officer  and  chief   financial   officer,   after   evaluating  the
effectiveness of the Company's  "disclosure controls and procedures" (as defined
in the  Securities  Exchange Act of 1934 Rules 13a-14c and  15-d-14(c))  as of a
date (the  "Evaluation  Date")  within 90 days  before the  filing  date of this
quarterly  report,  have concluded that as of the Evaluation Date, the Company's
disclosure  controls and  procedures  were  adequate and designed to ensure that
material  information  relating to the Company and its  consolidated  subsidiary
would be made known to them by others within those entities.

(b)  Changes in  internal  controls.  There were no  significant  changes in the
Company's internal controls or in other factors that could significantly  affect
its disclosure controls and procedures subsequent to the Evaluation Date.

                                       20
<PAGE>

                           PART II - OTHER INFORMATION

ITEM 1.   LEGAL PROCEEDINGS

     On October 15, 2002, Darrin Sherrill, the Company's former general manager,
filed an action  against the Company in the  Superior  Court of Forsyth  County,
Georgia asserting that the Company breached his employment agreement,  conspired
to obstruct Mr.  Sherrill's  registration  of the Company's  common  stock,  and
defamed  Mr.  Sherrill  to  the  Company's  employees.  Mr.  Sherrill  seeks  an
unspecified  amount of  damages.  On  October  25,  2002,  the  Company  filed a
counterclaim  against Mr.  Sherrill  in the  Superior  Court of Forsyth  County,
Georgia asserting that Mr. Sherrill  improperly induced the Company's  customers
and employees to end their  relationships with the Company and join Mr. Sherrill
in his new venture. Additionally, the Company asserted that Mr. Sherrill plotted
to  misappropriate  the Company's  trade secrets and proprietary  software.  The
Company seeks an  unspecified  amount of damages.  It is presently the intent of
the Company's management to move toward a settlement of these matters. There can
be no assurance the Company will not be adversely affected by these proceedings.

ITEM 2.   CHANGES IN SECURITIES

(c)  During the three  months  ended  December  31,  2002,  the  Company  issued
1,052,500 shares of Common Stock to two accredited  investors,  who acquired the
shares as an  investment.  During the three months ended  December 31, 2002, the
Company issued 30,000 shares of Common Stock as  compensation to a member of the
Company's  board of directors  for  consulting  services  and 754,600  shares of
Common  Stock to seven other  vendors for  selling,  general and  administrative
expenses.  During the three months ended  December 31, 2002,  the Company issued
200,000 shares of Common Stock for the  settlement of notes payable.  See Note 9
of Notes to Consolidated  Financial Statements,  which is incorporated herein by
reference.  The Company  relied on Section 4(2) of the Securities Act of 1933 in
the private placement.

ITEM 3.   DEFAULTS UPON SENIOR SECURITIES

     The Company's  $2,500,000 note payable became due on April 29, 2002, and is
currently in default.  Accrued  interest owed on this note through  December 31,
2002, is approximately $372,000. There can be no assurances that the lender will
not take legal action to collect amounts due.

ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K

(a)       Exhibits:

10.101    Statement  furnished  pursuant to Section 906 of Sarbanes-Oxley Act of
          2002.

10.102    Asset Purchase  Agreement between the Company and Altura, XL LLC dated
          January 31, 2003.

(b)       Report on Form 8-K:

          None.

                                       21
<PAGE>

                                   SIGNATURES

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

                                        SYMBIAT, INC. AND SUBSIDIARY


Date: February 14, 2003                 By: /s/ John W. Smith
                                            -----------------------------
                                            John W. Smith
                                            President
                                            (Principal Executive Officer)


                                        By: /s/ E. Leo Bebeau
                                            -----------------------------
                                            E. Leo Bebeau
                                            Chief Financial Officer
                                            (Principal Financial and
                                            Accounting Officer)

                                       22
<PAGE>