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 September 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
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:  14,889,421 shares of common stock on
November 7, 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 September
              30, 2002 and March 31, 2002                                      3

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

          Unaudited Consolidated Statements of Operations for
              the six months ended September 30, 2002 and
              September 30, 2001                                               5

          Unaudited Consolidated Statements of Cash Flows for
              the six months ended September 30, 2002 and
              September 30, 2001                                               6

          Notes to Unaudited Consolidated Financial Statements                 8

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

ITEM 3.   Controls and Procedures                                             19

                           PART II - OTHER INFORMATION

ITEM 2.   Changes in Securities                                               20

ITEM 3.   Defaults Upon Senior Securities                                     20

ITEM 6.   Exhibits and Reports on Form 8-K                                    20

SIGNATURES                                                                    21

<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>
                                                         September 30, 2002   March 31, 2002
                                                         ------------------ ------------------
                                                            (unaudited)
ASSETS
Current assets:
<S>                                                         <C>                <C>
    Cash and cash equivalents                               $        100       $         70
    Receivables, net of allowance for doubtful
       accounts of $71 as of September 30, 2002
       and $92 as of March 31, 2002                                  324                490
    Inventories, net                                                 413              1,257
    Prepaid expenses and other                                        67                 83
                                                            ------------       ------------
Total current assets                                                 904              1,900

Property and equipment, net                                           46                393

Goodwill                                                              --              8,078

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

Other                                                                 30                  7
                                                            ------------       ------------


TOTAL ASSETS                                                $        980       $     10,589
                                                            ============       ============

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
    Accounts payable, trade                                 $      1,741       $      1,815
    Accrued liabilities:
         Deferred maintenance revenue                              1,047                906
         Accured lease liability                                   1,052                 --
         Interest                                                    394                215
         Other                                                     1,021                932
   Line of credit                                                     51                 57
   Notes payable to stockholders                                     413                413
   Current maturities of long-term debt                            2,523              2,600
                                                            ------------       ------------
Total current liabilities                                          8,242              6,938

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

Total liabilities                                                  8,342              7,038
                                                            ------------       ------------

Commitments and contingencies

Series A redeemable convertible preferred stock,
  $10 stated value; 400,000 shares authorized;
  115,057 and 107,437 shares issued and
    outstanding, as of September 30, 2002 and
    March 31, 2002, respectively                                   1,026                982
                                                            ------------       ------------

Stockholders' equity:
  Common stock, $.01 par value; 25,000,000 shares
  authorized; 14,889,421 and 14,469,200 shares
  issued and outstanding, as of September 30,
  2002 and March 31, 2002, respectively                              149                145
  Additional paid-in capital                                      61,172             60,974
  Accumulated deficit                                            (69,709)           (58,550)
                                                            ------------       ------------
Total stockholders' equity                                        (8,388)             2,569
                                                            ------------       ------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                  $        980       $     10,589
                                                            ============       ============
</TABLE>

                 See notes to consolidated financial statements.

<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
                                                         -------------------------------------
                                                         September 30, 2002 September 30, 2001
                                                         ------------------ ------------------
                                                                      (unaudited)
Revenues:
<S>                                                         <C>                <C>
     Service and support                                    $      1,167       $      1,479
     Connectivity products                                           332                829
                                                            ------------       ------------
                                                                   1,499              2,308
                                                            ------------       ------------
Expenses:
     Cost of service and support                                     752                975
     Cost of connectivity products                                   277                531
     Provision for inventory reserve                                 270                 50
     Selling, general and administrative                           1,630              1,956
     Impairment of goodwill                                        8,078                 --
     Product development                                             126                406
                                                            ------------       ------------
                                                                  11,133              3,918
                                                            ------------       ------------

Operating loss                                                    (9,634)            (1,610)

Other  income (expense):
     Loan discount amortization                                       --               (231)
     Interest expense - affiliates                                   (19)               (13)
     Interest expense - other                                        (83)               (67)
     Other income                                                     11                 (3)
                                                            ------------       ------------

Loss before income taxes                                          (9,725)            (1,924)

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

Net loss                                                          (9,725)            (1,924)

Preferred stock dividend                                             (22)               (14)
                                                            ------------       ------------

Net loss available to common stockholders                   $     (9,747)      $     (1,938)
                                                            ============       ============

Loss per common share - basic and diluted                   $      (0.66)      $      (0.15)
                                                            ============       ============

Weighted average shares outstanding - basic and diluted           14,820             12,953
                                                            ============       ============
</TABLE>

                 See notes to consolidated financial statements.

<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 six months ended
                                                         -------------------------------------
                                                         September 30, 2002 September 30, 2001
                                                         ------------------ ------------------
                                                                      (unaudited)
Revenues:
<S>                                                         <C>                <C>
     Service and support                                    $      2,296       $      3,171
     Connectivity products                                           833              1,906
                                                            ------------       ------------
                                                                   3,129              5,077
                                                            ------------       ------------
Expenses:
     Cost of service and support                                   1,549              2,068
     Cost of connectivity products                                   697              1,221
     Provision for inventory reserve                                 510                 84
     Selling, general and administrative                           2,360              2,981
     Impairment of goodwill                                        8,078                 --
     Impairment of certain long-lived assets                         465                 --
     Product development                                             394                792
                                                            ------------       ------------
                                                                  14,053              7,146
                                                            ------------       ------------

Operating loss                                                   (10,924)            (2,069)

Other  income (expense):
     Loan discount amortization                                       --               (455)
     Interest expense - affiliates                                   (25)               (29)
     Interest expense - other                                       (163)              (144)
     Other income                                                      2                  1
                                                            ------------       ------------

Loss before income taxes                                         (11,110)            (2,696)

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

Net loss                                                         (11,110)            (2,696)

Preferred stock dividend, including beneficial
   conversion amount of $ 5 and $143
   in nine months ended
   Septemer 30, 2002 and September 30, 2001, respectively            (49)              (165)
                                                            ------------       ------------

Net loss available to common stockholders                   $    (11,159)      $     (2,861)
                                                            ============       ============

Loss per common share - basic and diluted                   $      (0.76)      $      (0.22)
                                                            ============       ============

Weighted average shares outstanding - basic and diluted           14,675             12,904
                                                            ============       ============
</TABLE>

                 See notes to consolidated financial statements.

<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 six months ended
                                                                                         -------------------------
                                                                                        September 30,  September 30,
                                                                                            2002           2001
                                                                                         ----------     ----------
                                                                                                (unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                                                      <C>            <C>
  Net loss                                                                               $  (11,110)    $   (2,696)
  Adjustments to reconcile net loss to net cash
     provided by (used in) operations:
       Stock issued for selling, general and adminstrative expenses                              33            855
       Depreciation and amortization                                                             98            655
       Provision for uncollectible accounts receivable                                           --              9
       Provision for inventory reserve                                                          510             84
       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                                                                           166            112
          Inventories                                                                           334            397
          Prepaid expenses and other                                                             (7)           170
          Accounts payable and accrued liabilities                                              335            102
                                                                                         ----------     ----------

Net cash used in operations                                                                     (46)          (312)
                                                                                         ----------     ----------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Capitalization of software costs                                                              --            (18)
   Capital expenditures                                                                          (5)           (33)
                                                                                         ----------     ----------

Net cash used in investing activities                                                            (5)           (51)
                                                                                         ----------     ----------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from the issuance of debt                                                             --            200
  Repayment of debt                                                                             (77)           (58)
  Net repayments under lines of credit                                                           (6)          (587)
  Proceeds from issuance of preferred stock                                                      80            686
  Cost associated with the issuance of preferred stock                                           --            (46)
  Proceeds from issuance of common stock                                                         84             --
                                                                                         ----------     ----------

Net cash provided by financing activities                                                        81            195
                                                                                         ----------     ----------

Net increase (decrease) in cash and cash equivalents                                             30           (168)
Cash and cash equivalents, beginning of year                                                     70            264
                                                                                         ----------     ----------
Cash and cash equivalents, end of period                                                 $      100     $       96
                                                                                         ==========     ==========

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
    Cash paid during the period for:
        Interest                                                                         $       77     $       77
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            143
    Preferred stock issued for dividends                                                         44             22
    Common stock issued for settlement of debt                                                   --            128
    Common stock issued for settlement of accounts payable                                       --              3
    Common stock issued for selling, general and adminstrative expenses                          27            855
</TABLE>

        See accompanying notes to the consolidated financial statements.

<PAGE>

                          SYMBIAT, INC. AND SUBSIDIARY
                 (FOMERLY COMPUTONE CORPORATION AND SUBSIDIARY)
              UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           SEPTEMBER 30, 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 September 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 six
months ended  September  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,  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 September  30, 2002,  the Company has
$2,936,000 in outstanding  principal on notes payable that matures during fiscal
2003. In addition, as of November 14, 2002, the Company is 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 an agreement to
forego any further  actions until the Company  closes with another  lender.  The
agreement expires on December 6, 2002. There can be no

<PAGE>

                          SYMBIAT, INC. AND SUBSIDIARY
                 (FOMERLY COMPUTONE CORPORATION AND SUBSIDIARY)
        UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           SEPTEMBER 30, 2002 AND 2001

2.   GOING CONCERN UNCERTAINTY, CONTINUED

assurances  that the lender will not take legal  action to collect  amounts due.
Finally,   on  October  10,  2002,  the  Company  received  a  service  contract
cancellation notice from its largest customer (See Note 14). 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 six months ended September 30, 2002, the  Connectivity  Products
business segment had an operating loss of $2,748,000 on revenue of $833,000. For
the same period,  the Service and Support business segment had an operating loss
of  $98,000  (before a  $8,078,000  goodwill  impairment  charge)  on revenue of
$2,296,000.  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.

     The revenue during the six months ended  September 30, 2002 for the Service
and Support segment was $2,296,000. 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'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.

<PAGE>

                          SYMBIAT, INC. AND SUBSIDIARY
                 (FOMERLY COMPUTONE CORPORATION AND SUBSIDIARY)
        UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           SEPTEMBER 30, 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 $720,000 and $705,000 at September  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  included  this  amount in
accrued  liabilities in the  accompanying  financial  statements.  On October 5,
2002,  the Company  reached a settlement  with this vendor whereby the inventory
items  would be made  available  for no  additional  cash  outlay.  The  Company
recorded  $510,000 and $84,000 of  provisions  for  inventory  obsolescence  and
excess inventory quantities during the three months ended September 30, 2002 and
September 30, 2001, respectively.

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

                                                 September 30,    March 31,
                                                     2002           2002
                                                  ----------     ----------

     Inventories:
        Finished goods                            $      155     $      313
        Work in process                                   --            134
        Raw materials                                    258            810
                                                  ----------     ----------
                                                  $      413     $    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 4,507,112
and 4,949,417 as of September 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  $44,000 and $22,000 during
the six months ended  September  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 six months ended September 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.

<PAGE>

                          SYMBIAT, INC. AND SUBSIDIARY
                 (FOMERLY COMPUTONE CORPORATION AND SUBSIDIARY)
        UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           SEPTEMBER 30, 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 November 14, 2002, the Company
is in default of the Note and in September  2002, the lender filed notice of its
intent to call the note.  On October 2, 2002,  the lender signed an agreement to
forego any further  actions until the Company  closes with another  lender.  The
agreement  expires on  December  6, 2002.  There can be no  assurances  that the
lender  will not take any  further  legal  actions 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 September
30, 2002,  the Company had $51,000 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  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

<PAGE>

                          SYMBIAT, INC. AND SUBSIDIARY
                 (FOMERLY COMPUTONE CORPORATION AND SUBSIDIARY)
        UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           SEPTEMBER 30, 2002 AND 2001

8.   GOODWILL, CONTINUED

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  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 lost of its largest  customer and well as the notice
from a lender of its intent to call a note  currently  in default  (See Note 14)
along  with  the  inability  to reach a  definitive  agreement  to sell  certain
products  and  technology  (See Note 13) has  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.

     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 six months ended  September
30, 2002,  the Company  issued 7,635 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 September
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.

<PAGE>

                          SYMBIAT, INC. AND SUBSIDIARY
                 (FOMERLY COMPUTONE CORPORATION AND SUBSIDIARY)
        UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           SEPTEMBER 30, 2002 AND 2001

9.   REDEEMABLE CONVERTIBLE PREFERRED STOCK AND COMMON STOCK, CONTINUED

     During the six months ended  September 30, 2002,  the Company issued 30,000
shares of common stock valued at $33,000 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.  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.

<PAGE>

              [The remainder of this page is purposely left blank]

<PAGE>

                          SYMBIAT, INC. AND SUBSIDIARY
                 (FOMERLY COMPUTONE CORPORATION AND SUBSIDIARY)
        UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           SEPTEMBER 30, 2002 AND 2001

11.  SEGMENT INFORMATION

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

<TABLE>
<CAPTION>
                                                 CONNECTIVITY       SERVICE        CONSOLIDATED
                                                   PRODUCTS       AND SUPPORT         TOTALS
                                                  ----------       ----------       ----------
<S>                                               <C>              <C>              <C>
     THREE MONTHS ENDED SEPTEMBER 30, 2002
     Revenue                                      $      332       $    1,167       $    1,499
     Operating income (loss)                          (1,469)          (8,165)          (9,634)
     Total assets                                        526              454              980

     SIX MONTHS ENDED SEPTEMBER 30, 2002
     Revenue                                      $      833       $    2,296       $    3,129
     Operating income (loss)                          (2,748)          (8,176)         (10,924)
     Total assets                                        526              454              980

     THREE MONTHS ENDED SEPTEMBER 30, 2001
     Revenue                                      $      829       $    1,479       $    2,308
     Operating income (loss)                          (1,789)             179           (1,610)
     Total assets                                      2,721            9,139           11,860

     SIX MONTHS ENDED SEPTEMBER 30, 2001
     Revenue                                      $    1,906       $    3,171       $    5,077
     Operating income (loss)                          (2,555)             486           (2,069)
     Total assets                                      2,721            9,139           11,860
</TABLE>

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.

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

<PAGE>

                          SYMBIAT, INC. AND SUBSIDIARY
                 (FOMERLY COMPUTONE CORPORATION AND SUBSIDIARY)
        UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           SEPTEMBER 30, 2002 AND 2001

12.  CONTINGENCIES AND RELATED PARTY TRANSACTIONS, CONTINUED

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

RELATED PARTY TRANSACTIONS - During the six months ended September 30, 2002, the
Company  issued  common stock  valued at $33,000 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 September 30, 2002, the Company had notes
payable  due to  shareholders  of  $413,000.  The Company  incurred  $25,000 and
$29,000 in interest  expense on related party notes  payables for the six months
ending September 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 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. 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.

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

14.  SUBSEQUENT EVENTS

     In September  2002, the lender  holding the  $2,500,000  note payable filed
notice of its intent to call the note currently in default.  The relief that the
lender seeks could include foreclosure. On September 4, 2002, the Company signed
a term sheet with an investor  for a  $2,500,000,  9% note that would  mature in
October  2005.  The  proceeds  from  the 9%  note  would  be used to pay off the
original  note  payable.  The term  sheet  calls  for the  investor  to  receive
6,500,000   warrants  for  the   Company's   common   stock  as  well   majority
representation  on the Company's board of directors.  As result of obtaining the
term sheet, the lender agreed to sign a standstill  agreement  whereby it agreed
not to foreclose or in any other way hinder the  operations of the Company.  The
standstill agreement will expire on December 6, 2002.

     On October 10, 2002,  the Company  received a service  cancellation  notice
from its largest customer. Billings to the customer were $612,000 and $1,294,000
for the three and six month periods ending September 30, 2002, respectively. The
Company has signed several service  contracts with new customers in an effort to
replace these  billings;  however,  there can be no assurances  that the revenue
received from this significant  customer can be completely  replaced in the near
term.

<PAGE>

                          SYMBIAT, INC. AND SUBSIDIARY
                 (FOMERLY COMPUTONE CORPORATION AND SUBSIDIARY)
        UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           SEPTEMBER 30, 2002 AND 2001

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 SEPTEMBER 30, 2002 COMPARED TO THE THREE MONTHS ENDED
------------------------------------------------------------------------
SEPTEMBER 30, 2001
------------------

     During the three months ended  September 30, 2002,  the Company  incurred a
net loss of  $9,725,000  on net sales of  $1,499,000  compared  to a net loss of
$1,924,000  during the three  months  ended  September  30, 2001 on net sales of
$2,308,000.

     Net sales from the Service and Support  segment  decreased from  $1,479,000
during the three months ended September 30, 2001 to $1,167,000  during the three
months ended  September 30, 2002.  This decrease is primarily due to lower sales
to the Company's largest customer.  Net sales of Connectivity Products decreased
from  $829,000  during the three  months  ended  September  30, 2001 to $332,000
during the three  months ended  September  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  $752,000,  or 64% of Service
and Support revenue (36% gross margin), for the three months ended September 30,
2002  compared to  $975,000,  or 66% of Service and Support  revenue  (34% gross
margin),  for the three months ended  September 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 $277,000,  or 83% of Connectivity  Product sales (17% gross margin), for
the three  months  ended  September  30, 2002  compared to  $531,000,  or 64% of
Connectivity  Product  sales  (36% gross  margin),  for the three  months  ended
September  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

<PAGE>

                          SYMBIAT, INC. AND SUBSIDIARY
                 (FOMERLY COMPUTONE CORPORATION AND SUBSIDIARY)
        UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           SEPTEMBER 30, 2002 AND 2001

operating  costs that were not affected by the 60%  reduction  in product  sales
revenues.  The Company  recorded  $270,000 and $50,000  reserves  for  inventory
obsolescence  and excess  inventory  during the three month ended  September 30,
2002 and September 30, 2001, respectively.

     Selling,  general and administrative  ("SGA") expenses for the three months
ended September 30, 2002 totaled $1,630,000 compared to $1,956,000 for the three
months ended June 30, 2001.  SGA expenses for Service and Support were  $502,000
for the three months ended September 30, 2002 compared to $325,000 for the three
months ended  September  30,  2001.  This  increase of $177,000,  or 54%, is the
result of increased  compensation  costs.  SGA expenses  related to Connectivity
Products decreased by $503,000 or 31% in the current year's three-month  period.
This decrease is attributable to the Company's cost  containment  efforts and an
$855,000 non-cash charge the Company recorded for the issuance of 600,000 shares
of common stock for consulting  services during the three months ended September
30, 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.

     During the three months ended  September 30, 2002, the Company  recorded an
$8,078,000 charge for goodwill impairment in accordance with FASB 142.

     Product  development  costs  charged to expense for the three  months ended
September  30,  2002  totaled  $126,000,  or 8% of total net sales,  compared to
$406,000,  or 17% of total net sales for the three month period ended  September
30,  2001.  The decrease of $280,000,  or 69%, is  primarily  due the  Company's
decreased compensation costs and other cost containment efforts.

     Interest expense charged by others for the three months ended September 30,
2002 totaled  $83,000  compared to $67,000 for the three months ended  September
30, 2001. During the three months ended September 30, 2001, the Company expensed
$231,000  related to  amortization  of the discount on the 11%,  $2,500,000 note
payable. The discount became fully amortized during December 2001.

SIX MONTHS ENDED SEPTEMBER 30, 2002 COMPARED TO THE THREE MONTHS ENDED SEPTEMBER
--------------------------------------------------------------------------------
30, 2001
--------

     During the six months ended September 30, 2002, the Company  incurred a net
loss  of  $6,671,000  on net  sales  of  $3,129,000  compared  to a net  loss of
$2,696,000  during  the six  months  ended  September  30,  2001 on net sales of
$5,077,000.

     Net sales from Service and Support segment decreased from $3,171,000 during
the six months  ended  September  30, 2001 to  $2,296,000  during the six months
ended  September 30, 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 $1,906,000 during the six months ended
September 30, 2001 to $833,000  during the six months ended  September 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 $1,549,000, or 67% of Service
and Support  revenue (33% gross margin),  for the six months ended September 30,
2002 compared to  $2,068,000,  or 65% of Service and Support  revenue (35% gross
margin),  for the six months ended  September  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 $697,000,  or 84% of Connectivity  Product sales (16% gross margin), for
the six months  ended  September  30,  2002  compared to  $1,221,000,  or 64% of
Connectivity  Product  sales  (36%  gross  margin),  for  the six  months  ended
September  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 were not affected by the 56%
reduction in product sales revenues. The Company recorded

<PAGE>

                          SYMBIAT, INC. AND SUBSIDIARY
                 (FOMERLY COMPUTONE CORPORATION AND SUBSIDIARY)
        UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           SEPTEMBER 30, 2002 AND 2001

$510,000 and $84,000  reserves for inventory  obsolescence  and excess inventory
during  the  six  month  ended  September  30,  2002  and  September  30,  2001,
respectively.

     Selling,  general and  administrative  ("SGA")  expenses for the six months
ended September 30, 2002 totaled  $2,360,000  compared to $2,981,000 for the six
months  ended  September  30,  2001.  SGA  expenses for Service and Support were
$845,000 for the six months ended  September  30, 2002  compared to $617,000 for
the six months ended September 30, 2001.  This increase of $228,000,  or 37%, is
the result of increased compensation costs. SGA expenses related to Connectivity
Products  decreased by $849,000 or 36% in the current year's  six-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 six  months  ended
September  30,  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.

     During the six months ended  September  30, 2002,  the Company  recorded an
$8,078,000 charge for goodwill impairment in accordance with FASB 142.

     During the six months ended  September 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 six months  ended
September  30, 2002  totaled  $394,000,  or 13% of total net sales,  compared to
$792,000, or 16% of total net sales for the six month period ended September 30,
2001. The decrease of $398,000, or 50%, is primarily due the Company's decreased
compensation costs and other cost containment efforts.

     Interest  expense  charged by others for the six months ended September 30,
2002 totaled  $163,000  compared to $144,000 for the six months ended  September
30, 2001.  Also during the six months  ended  September  30,  2001,  the Company
expensed $455,000 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 six
months ended  September  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,  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 September  30, 2002,  the Company has
$2,936,000 in outstanding  principal on notes payable that matures during fiscal
2003. In addition, as of November 14, 2002, the Company is 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.  There can be no  assurances  that the lender  will not
take legal action to collect  amounts  due.  Finally,  on October 10, 2002,  the
Company  received  a  service  contract  cancellation  notice  from its  largest
customer  (See  Note  14).  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 six months ended September 30, 2002, the  Connectivity  Products
business segment had an operating loss of $2,748,000 on revenue of $833,000. For
the same period,  the Service and Support business segment had an operating loss
of  $98,000  (before a  $8,078,000  goodwill  impairment  charge)  on revenue of
$2,296,000.  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

<PAGE>

                          SYMBIAT, INC. AND SUBSIDIARY
                 (FOMERLY COMPUTONE CORPORATION AND SUBSIDIARY)
        UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           SEPTEMBER 30, 2002 AND 2001

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.

     The  revenue  during the three  months  ended  September  30,  2002 for the
Service and Support segment was $1,167,000.  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 $46,000 during the six months
ended September 30, 2002 compared cash used by operating  activities of $312,000
during the six months ended  September  30, 2001. A portion of the cash consumed
by operating  losses for the six months ended  September  30, 2002 was offset by
decreases in accounts  receivable  and  inventory and the write down of goodwill
and other long-lived assets.

     Cash used in investing  activities amounted to $5,000 during the six months
ended  September  30,  2002  compared to cash used in $51,000 for the six months
ended September 30, 2001.

     Cash provided by financing  activities  amounted to $81,000  during the six
months  ended  September  30,  2002  compared  to  cash  provided  by  financing
activities  of $195,000  during the six months ended  September  30,  2001.  The
Company had cash inflows from the issuance of preferred and common stock.

     Working  capital  deficit  amounted to  $7,338,000  at  September  30, 2002
compared to $5,038,000 at March 31, 2002. The ratio of current assets to current
liabilities  at September  30, 2002 was 0.11 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.

<PAGE>

                          SYMBIAT, INC. AND SUBSIDIARY
                 (FOMERLY COMPUTONE CORPORATION AND SUBSIDIARY)
        UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           SEPTEMBER 30, 2002 AND 2001

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

RELATED PARTY TRANSACTIONS - During the six months ended September 30, 2002, the
Company  issued  common stock  valued at $33,000 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 September 30, 2002, the Company had notes
payable  due to  shareholders  of  $413,000.  The Company  incurred  $25,000 and
$29,000 in interest  expense on related party notes  payables for the six months
ending September 30, 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.


<PAGE>

                           PART II - OTHER INFORMATION

ITEM 2.   CHANGES IN SECURITIES

(c)  During the three months ended  September 30, 2002, the Company  allowed the
redemption  of 8,013  shares of  Preferred  Stock for  136,221  shares of Common
Stock.  During the three months ended  September  30, 2002,  the Company  issued
140,000  shares of Common  Stock to an  accredited  investor,  who  acquired the
shares as an investment.  During the three months ended  September 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  November 14,
2002, is approximately $261,000. 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    Amended  and  Restated  Employment  Agreement  between the Company and
          Eugene L. Bebeau dated November 1, 2001.

10.103    Amended and Restated Employment Agreement between the Company and John
          W. Smith dated November 1, 2001.

(b)       Report on Form 8-K:

          None.

<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: November 14, 2002                 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)