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 June 30, 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 Identification No.)
incorporation  or  organization)

          1060 Windward Ridge Parkway, Suite 100, Alpharetta, GA 30005
          ------------------------------------------------------------
                    (Address of principal executive offices)

         Issuer's telephone number, including area code: (770) 625-0000

                              COMPUTONE CORPORATION
                              ---------------------
(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:  14,733,200 shares of common stock on
July 31, 2002.

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 June 30, 2002
          and March 31, 2002                                                  3

          Unaudited Consolidated Statements of Operations for the three
          months ended June 30, 2002 and June 30, 2001                        4

          Unaudited Consolidated Statements of Cash Flows for the
          three months ended June 30, 2002 and June 30, 2001                  5

          Notes to Unaudited Consolidated Financial Statements                6

ITEM 2.   Management's Discussion and  Analysis of Financial Condition
          and Results of Operations                                           13

                           PART II - OTHER INFORMATION

ITEM 2.   Changes in Securities                                               16

ITEM 3.   Defaults Upon Senior Securities                                     16

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

SIGNATURES                                                                    17

                                       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>
                                                                         June 30,         March 31,
                                                                           2002             2002
                                                                       ------------     ------------
                                                                       (unaudited)
ASSETS
Current assets:
<S>                                                                    <C>              <C>
    Cash and cash equivalents                                          $         40     $         70
    Receivables, net of allowance for doubtful accounts
       of $85 as of June 30, 2002 and $92 as of March 31, 2002                  664              490
    Inventories, net                                                            795            1,257
    Prepaid expenses and other                                                   84               83
                                                                       ------------     ------------
Total current assets                                                          1,583            1,900

Property and equipment, net                                                      55              393

Goodwill                                                                      8,078            8,078

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

Other                                                                             7                7
                                                                       ------------     ------------

TOTAL ASSETS                                                           $      9,723     $     10,589
                                                                       ============     ============

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
    Accounts payable, trade                                            $      1,814     $      1,815
    Accrued liabilities:
       Deferred maintenance revenue                                           1,142              906
       Interest                                                                 304              215
       Other                                                                    956              932
    Line of credit                                                               90               57
    Notes payable to stockholders                                               413              413
    Current maturities of long-term debt                                      2,596            2,600
                                                                       ------------     ------------
Total current liabilities                                                     7,315            6,938

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

Total liabilities                                                             7,415            7,038
                                                                       ------------     ------------

Commitments and contingencies

Series A redeemable convertible preferred stock, $10 stated value;
  400,000 shares authorized; 117,632 and 107,437 shares issued and
  outstanding, as of June 30, 2002 and March 31, 2002, respectively           1,084              982
                                                                       ------------     ------------

Stockholders' equity:
  Common stock, $.01 par value; 25,000,000 shares authorized;
  14,583,200 and 14,469,200 shares issued and outstanding,
  as of June 30, 2002 and March 31, 2002, respectively                          146              145
  Additional paid-in capital                                                 61,040           60,974
  Accumulated deficit                                                       (59,962)         (58,550)
                                                                       ------------     ------------
Total stockholders' equity                                                    1,224            2,569
                                                                       ------------     ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                             $      9,723     $     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)

                                                   For the three months ended
                                                  -----------------------------
                                                    June 30,          June 30,
                                                     2002              2001
                                                  ------------     ------------
                                                           (unaudited)
Revenues:
     Connectivity products                        $        501     $      1,077
     Service and support                                 1,128            1,737
                                                  ------------     ------------
                                                         1,629            2,814
                                                  ------------     ------------
Expenses:
     Cost of connectivity products                         419              674
     Cost of service and support                           797            1,138
     Provision for inventory reserve                       240               50
     Selling, general and administrative                   730            1,025
     Writeoff of certain long-lived assets                 465               --
     Product development                                   268              386
                                                  ------------     ------------
                                                         2,919            3,273
                                                  ------------     ------------

Operating loss                                          (1,290)            (459)

Other income (expense):
     Loan discount amortization                             --             (224)
     Interest expense - affiliates                         (14)             (16)
     Interest expense - other                              (80)             (77)
     Other income                                           (1)               4
                                                  ------------     ------------

Loss before income taxes                                (1,385)            (772)

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

Net loss                                                (1,385)            (772)

Preferred stock dividend, including beneficial
     conversion amount of $5 and $143 in three
     months ended June 30, 2002 and June 30,
     2001, respectively                                    (27)            (151)
                                                  ------------     ------------

Net loss available to common stockholders         $     (1,412)    $       (923)
                                                  ============     ============

Loss per common share - basic and diluted         $      (0.10)    $      (0.07)
                                                  ============     ============

Weighted average shares outstanding -
     basic and diluted                                  14,529           12,855
                                                  ============     ============

                 See notes to consolidated financial statements.

                                       4
<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 three months ended
                                                                                  -----------------------------
                                                                                    June 30,         June 30,
                                                                                      2002             2001
                                                                                  ------------     ------------
                                                                                           (unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                                               <C>              <C>
  Net loss                                                                        $     (1,385)    $       (772)
  Adjustments to reconcile net loss to net cash
     provided by (used in) operations:
       Stock issued for issued for selling, general and adminstrative expenses              20               --
       Depreciation and amortization                                                        85              327
       Provision for uncollectible accounts receivable                                      --                6
       Provision for inventory reserve                                                     240               50
       Writeoff of certain long-lived assets                                               465               --
       Changes in current assets and current liabilities
          Receivables                                                                     (174)             100
          Inventories                                                                      222              197
          Prepaid expenses and other                                                        (1)              59
          Accounts payable and accrued liabilities                                         348              205
                                                                                  ------------     ------------
Net cash provided by (used in) operations                                                 (180)             172
                                                                                  ------------     ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Capitalization of software costs                                                          --               (8)
  Capital expenditures                                                                      (1)              (7)
                                                                                  ------------     ------------
Net cash used in investing activities                                                       (1)             (15)
                                                                                  ------------     ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from the issuance of debt                                                        --              200
  Repayment of debt                                                                         (4)             (58)
  Net proceeds (repayments) under lines of credit                                           33             (587)
  Proceeds from issuance of preferred stock                                                 80              686
  Cost associated with the issuance of preferred stock                                      --              (46)
  Proceeds from issuance of common stock                                                    42               --
                                                                                  ------------     ------------

Net cash provided by financing activities                                                  151              195
                                                                                  ------------     ------------

Net increase (decrease) in cash and cash equivalents                                       (30)             352
Cash and cash equivalents, beginning of year                                                70              264
                                                                                  ------------     ------------
Cash and cash equivalents, end of period                                          $         40     $        616
                                                                                  ============     ============

SUPPLEMENTAL  DISCLOSURES OF CASH FLOW INFORMATION:
  Cash paid during the period
     for: Interest                                                                $          2     $         77
SUPPLEMENTAL DISCLOSURES OF NON-CASH FINANCING AND INVESTING ACTIVITIES:
  Preferred stock issued for settlement of accounts payable                       $         --     $         50
  Preferred stock issued for settlement of accrued liabilities                              --               50
  Warrants associated with the issuance of preferred stock                                  --               46
  Dividend associated with preferred stock beneficial conversion feature                     5              143
  Preferred stock issued for dividends                                                      22                8
  Common stock issued for settlement of accounts payable                                    --                1
  Common stock issued for selling, general and adminstrative expenses                       20               --
</TABLE>

        See accompanying notes to the consolidated financial statements.

                                       5
<PAGE>

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

     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 June 30, 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 three
months  ended June 30, 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,  respectively,  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 June 30, 2002, the Company has
$3,009,000 in outstanding  principal on notes payable that matures during fiscal
2003. In addition,  as of August 14, 2002,  the Company is in default of its 11%
$2,500,000 note payable.  There can be no assurances that such  discussions will
be successful  or that the lender will not take legal action to collect  amounts
due. These matters raise substantial doubt

                                       6
<PAGE>

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

2.   GOING CONCERN UNCERTAINTY, CONTINUED

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 three  months  ended June 30, 2002,  the  Connectivity  Products
business segment had an operating loss of $1,279,000 on revenue of $501,000. For
the same period the Service and Support  business  segment had an operating loss
of $11,000 on revenue of $1,128,000.  To address the continuing operating losses
in the Connectivity Products segment,  management has decided to attempt to sell
certain  products  and  technology  related  to the  Company's  family of remote
console products.  Management is also in the process of evaluating the remaining
products of the  Connectivity  Products  business  segment in order to determine
which,  if any, of those products will be  discontinued or if any assets will be
sold. As a result of the decision to  discontinue  products or sell assets,  the
Company might be required to write off of some or all of its currently  recorded
goodwill balances.

     The revenue during the three months ended June 30, 2002 for the Service and
Support  segment was  $1,128,000.  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's  policy is to defer  recognition  of revenue and cost of
products  sold  on  product  sales  to  distributors  until  such  time  as  the
distributor has sold the product.  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.

     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.

                                       7
<PAGE>

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

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 15  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 $691,000 and $705,000 at June 30, 2002 and March 31, 2002,
respectively. During the three months ended March 31, 2002, the Company recorded
a charge of $225,000 for excess  inventory  purchase  commitments for which they
may not recover  the value.  The  Company  has  included  this amount in accrued
liabilities  in the  accompanying  financial  statements.  The Company  recorded
$240,000 and $50,000  reserves for inventory  obsolescence  and excess inventory
during the three months ended June 30, 2002 and June 30, 2001, respectively.

     Inventories,  net of a reserve for obsolete,  excess and non-salable items,
consisted of the following at June 30, 2002 and March 31, 2002 (in thousands):

                                          June 30,            March 31,
                                           2002                2002
                                       ------------        ------------
      Inventories:
        Finished goods                 $        170        $        313
        Work in process                         132                 134
        Raw materials                           493                 810
                                       ------------        ------------
                                       $        795        $      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 5,113,649
and  4,904,417  as of June 30, 2002 and 2001,  respectively,  as their effect is
anti-dilutive.  As a result of the sale of  Preferred  Stock  (see Note 8),  the
Company paid dividends in Preferred Stock totaling $22,000 and $8,000 during the
three months ended June 30, 2002 and 2001, respectively, and recorded $5,000 and
$143,000  of  dividends   associated  with  the  Preferred  Stock's   beneficial
conversion  feature  during  the  three  months  ended  June 30,  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.

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.

                                       8
<PAGE>

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

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 August 14, 2002, the Company is
in default of the Note. 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. As of June 30, 2002, the adjusted exercise price
of the  warrant  was $2.46.  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 is  subordinated  to the  Company's  factoring  agreement.  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. The note became due in December 2001 and
is currently in default. The Company is pursuing financing  alternatives and has
continued  discussions with the lender to consider  strategic  alternatives that
would  restructure or repay this  indebtedness.  No assurances can be given that
the Company  will be able to complete  financing or  strategic  alternatives  in
sufficient amounts and/or under terms acceptable to the Company.

     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 June 30,
2002,  the Company  had  $90,000 in  outstanding  borrowings  leaving  less than
$25,000 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  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 six 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

                                       9
<PAGE>

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

8.   GOODWILL, CONTINUED

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 Company has determined that no such events
have occurred since its March 31, 2002 annual  impairment test. If circumstances
change,  the Company might be required to complete an impairment test that might
result  in the  write  off of some  or all of the  currently  recorded  goodwill
balances.

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.

     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 the three  months  ended June 30,  2002,  the Company  issued  8,000
shares of Preferred Stock valued at $80,000 for cash proceeds of $80,000. During
the three  months  ended June 30,  2002,  the  Company  issued  2,180  shares of
Preferred  Stock to pay  dividends  earned  during that period.  The issuance of
Preferred  Stock  resulted  in the  Company  recording  $5,000 and  $143,000  in
dividends  associated with the Preferred Stock's  beneficial  conversion feature
during  the  three  months  ended  June 30,  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 three  months  ended June 30, 2002,  the Company  issued  30,000
shares of common stock valued at $20,000 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.

                                       10
<PAGE>

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

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 April 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statements
No.  4,  44,  and  64,  Amendment  of  FASB  Statement  No.  13,  and  Technical
Corrections".  This  Statement  amends FASB  Statement  No. 13,  Accounting  for
Leases,  to  eliminate an  inconsistency  between the  required  accounting  for
sale-leaseback  transactions  and the  required  accounting  for  certain  lease
modifications  that have  economic  effects  that are similar to  sale-leaseback
transactions.   This  Statement   also  amends  other   existing   authoritative
pronouncements  to make various  technical  corrections,  clarify  meanings,  or
describe their applicability under changed conditions.  The Company has reviewed
the provisions of SFAS No. 145, and believes that upon  adoption,  the Statement
will not have a significant effect on its consolidated financial statements.

     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.

11.  SEGMENT INFORMATION

     The Company  identifies  its  reportable  segments  based on the  segment's
product offerings. Segment information for the three and three months ended June
30, 2002 and 2001, respectively, is as follows:

                                     CONNECTIVITY     SERVICE      CONSOLIDATED
                                       PRODUCTS      AND SUPPORT      TOTALS
                                     ------------   ------------   ------------
THREE MONTHS ENDED JUNE 30, 2002
Revenue                              $        501   $      1,128   $      1,629
Operating income (loss)                    (1,279)           (11)        (1,290)
Total assets                                1,003          8,720          9,723

THREE MONTHS ENDED JUNE 30, 2001
Revenue                              $      1,077   $      1,737   $      2,814
Operating income (loss)                      (766)           307           (459)
Total assets                                3,545          9,257         12,802

                                       11
<PAGE>

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

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.  The Company has $2,297,000 due on leases through 2008 for
its 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.

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
June 30, 2002, management believes that is unlikely that Multi-User will achieve
these performance objectives.

RELATED PARTY  TRANSACTIONS  - During the three months ended June 30, 2002,  the
Company  issued  common stock  valued at $20,000 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 June 30,  2002,  the Company had notes
payable  due to  shareholders  of  $413,000.  The Company  incurred  $14,000 and
$16,000 in interest expense on related party notes payables for the three months
ending June 30, 2002 and 2001, respectively.

13.  LETTER OF INTENT FOR 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  will  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. Subsequent to completion of this transaction, the Company would retain
a license for continued sales and support of its other products. Under the terms
of the  agreement,  Raritan would  purchase the  technology  and products for an
undisclosed  amount of cash.  For a  multi-year  period,  Raritan  would pay the
Company a royalty on revenues from current and subsequently  developed  products
that use the Company's technology. On August 2, 2002, the Company announced that
it was unable to reach a definitive  agreement  with  Raritan.  The Company will
continue to evaluate the  technology  and  products  related to the RCM devices.
Management  is also in the process of evaluating  the remaining  products of the
Connectivity  Products  business  segment in order to  determine  which of those
products,  if any, would be  discontinued  or if any additional  assets would be
sold.

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

                                       12
<PAGE>

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

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  sale of  certain  products  and  technology  to  Raritan,  (x)  the  highly
competitive market in which the Company operates,  (xi) the Company's ability to
respond to rapidly  developing  changes in its marketplace and (xii) 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 JUNE 30, 2002  COMPARED TO THE THREE  MONTHS ENDED JUNE 30,
--------------------------------------------------------------------------------
2001
----

     During the three  months ended June 30,  2002,  the Company  incurred a net
loss of $920,000 on net sales of  $1,629,000  compared to a net loss of $772,000
during the three months ended June 30, 2001 on net sales of $2,814,000.

     Net sales from Service and Support segment decreased from $1,737,000 during
the three months ended June 30, 2001 to $1,128,000 during the three months ended
June 30, 2002.  This  decrease is primarily  due to lower sales to the Company's
second and third largest customers. Net sales of Connectivity Products decreased
from  $1,077,000  during the three months ended June 30, 2001 to $501,000 during
the three  months  ended June 30, 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  $797,000,  or 71% of Service
and Support revenue (29% gross margin), for the three months ended June 30, 2002
compared  to  $1,138,000,  or 66% of  Service  and  Support  revenue  (34% gross
margin),  for the three months ended June 30, 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
$419,000, or 84% of Connectivity Product sales (16% gross margin), for the three
months ended June 30, 2002 compared to $674,000,  or 63% of Connectivity Product
sales (37% gross margin), for the three months ended June 30, 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

                                       13
<PAGE>

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

were not affected by the 53%  reduction in product sales  revenues.  The Company
recorded  $240,000 and $50,000  reserves for inventory  obsolescence  and excess
inventory  during  the  three  month  ended  June 30,  2002  and June 30,  2001,
respectively.

     Selling,  general and administrative  ("SGA") expenses for the three months
ended June 30, 2002 totaled $730,000 compared to $1,025,000 for the three months
ended June 30, 2001.  SGA expenses for Service and Support were $343,000 for the
three months ended June 30, 2002 compared to $292,000 for the three months ended
June 30,  2001.  This  increase of $51,000,  or 17%, is the result of  increased
compensation  costs. SGA expenses related to Connectivity  Products decreased by
$346,000 or 47% 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 June 30, 2001.

     During the three months ended June 30, 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 three  months ended
June 30, 2002 totaled $268,000, or 16% of total net sales, compared to $386,000,
or 14% of total net sales for the three month period  ended June 30,  2001.  The
decrease  of  $118,000,  or  31%,  is  primarily  due  the  Company's  decreased
compensation costs and other cost containment efforts.

     Interest expense charged by others for the three months ended June 30, 2002
totaled  $80,000  compared to $77,000 for the three  months ended June 30, 2001.
During the three  months  ended June 30,  2001,  the Company  expensed  $224,000
related to amortization of the discount on the 11%, $2,500,000 note payable. The
discount became fully amortized during December 2001.

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

     The accompanying  consolidated financial statements as of and for the three
months  ended June 30, 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,  respectively,  operating
cash flow deficiencies of $781,000,  and as of March 31, 2002, the Company has a
working capital  deficiency of $5,038,000.  As of June 30, 2002, the Company has
$3,009,000 in outstanding  principal on notes payable that matures during fiscal
2003.  In  addition,  as of July 1, 2002,  the  Company is in default of its 11%
$2,500,000 note payable.  There can be no assurances that such  discussions will
be successful  or 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 three  months  ended June 30, 2002,  the  Connectivity  Products
business segment had an operating loss of $1,279,000 on revenue of $501,000. For
the same period the Service and Support  business  segment had an operating loss
of $11,000 on revenue of $1,128,000.  To address the continuing operating losses
in the Connectivity Products segment,  management has decided to attempt to sell
certain  products  and  technology  related  to the  Company's  family of remote
console products.  Management is also in the process of evaluating the remaining
products of the  Connectivity  Products  business  segment in order to determine
which of those  products,  if any,  would be  discontinued  or if any additional
assets would be sold.

                                       14
<PAGE>

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

     The revenue during the three months ended June 30, 2002 for the Service and
Support  segment was  $1,128,000.  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.

     Cash used by  operating  activities  amounted to $180,000  during the three
months ended June 30, 2002  compared  cash  provided by operating  activities of
$172,000  during the three  months  ended June 30,  2001.  A portion of the cash
consumed by  operating  losses for the three  months ended June 30, 2002 and the
increase  in accounts  receivables  was offset by  decreases  in  inventory  and
increases in accounts payable and accrued liabilities.

     Cash used in  investing  activities  amounted  to $1,000  during  the three
months ended June 30, 2002 compared to cash used in $15,000 for the three months
ended June 30, 2001.

     Cash provided by financing activities amounted to $151,000 during the three
months ended June 30, 2002 compared to cash provided by financing  activities of
$195,000  during the three  months  ended June 30,  2001.  The  Company had cash
inflows from the issuance of preferred and common stock.

     Working capital deficit amounted to $5,732,000 at June 30, 2002 compared to
$5,038,000 at March 31, 2002. The ratio of current assets to current liabilities
at June 30, 2002 was 0.22 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.  The Company has $2,297,000 due on leases through 2008 for
its 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.

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

                                       15
<PAGE>

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

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 June 30, 2002, management
believes  that is  unlikely  that  Multi-User  will  achieve  these  performance
objectives.

RELATED PARTY  TRANSACTIONS  - During the three months ended June 30, 2002,  the
Company  issued  common stock  valued at $20,000 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 June 30,  2002,  the Company had notes
payable  due to  shareholders  of  $413,000.  The Company  incurred  $14,000 and
$16,000 in interest expense on related party notes payables for the three months
ending June 30, 2002 and 2001, respectively.

                           PART II - OTHER INFORMATION

ITEM 2.   CHANGES IN SECURITIES

(c)  During the three  months  ended June 30,  2002,  the Company  issued  8,000
shares of Preferred Stock to an accredited investor,  who acquired the shares as
an  investment.  During the three months ended June 30, 2002, the Company issued
30,000 shares of common stock as compensation for consulting services.  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 August
14, 2002, is approximately $186,000.  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:
10.100    Lease dated July 22, 2002 between Harbinger Avalon Ridge, L.P. and the
          Registrant for certain  premises located at 4920 Avalon Ridge Parkway,
          Norcross, Georgia.

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

(b)       Report on Form 8-K:
          On July 12, 2002, the Company filed Form 8-K/A reporting Item 5 events
          regarding  its  name  change  and the  announcement  of a  Conditional
          Warrant Distribution.

                                       16
<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:  August 14, 2002               By:  /s/ E. Leo Bebeau
                                          -----------------
                                          E. Leo Bebeau
                                          President and Chief Executive Officer
                                          (Principal Executive Officer)


                                     By:  /s/ Keith H. Daniel
                                          -------------------
                                          Keith H. Daniel
                                          Chief Financial Officer
                                          (Principal Financial and Accounting
                                          Officer)

                                       17
<PAGE>