SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB

(Mark One)

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

                      For the quarter ended March 31, 1999

                                       OR

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

      For the transition period from ________________ to ________________

                         Commission File Number 0-19726

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

            Delaware                                           94-3022377
  (State or other jurisdiction                              (I.R.S. Employer
 of incorporation or organization)                        Identification Number)

                        6006 North Mesa Street, Suite 515
                              El Paso, Texas 79912
                    (Address of principal executive offices)

                                 (915) 581-5828
                           (Issuer's telephone number)

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

As of May 18, 1999, 3,832,411 shares of Class A Common Stock, no shares of Class
B Common Stock,  and 51,073 shares of Series B Convertible  Preferred Stock were
outstanding,  which is  convertible  into  25,536,500  shares  of Class A Common
Stock.


<PAGE>


                                  CAMBIO, INC.

                                   Form 10-QSB

                                      INDEX


                                                                           Page
                                                                          Number
                                                                          ------
Part I.  Financial Information

         Item 1. Financial Statements

                 Condensed Consolidated Balance
                 Sheet as of March 31, 1999                                   3

                 Condensed Consolidated Statements
                 of Operations for the three months and
                 nine months ended March 31, 1999 and 1998                    4

                 Condensed Consolidated Statements
                 of Cash Flows for the nine months
                 ended March 31, 1999 and 1998                                5

                 Notes to Financial Statements                                6

         Item 2. Management's Discussion and
                 Analysis of Financial Condition
                 and Results of Operations                                 7-12

Part II. Other Information and Signatures                                 13-14







                                                                               2

<PAGE>


                                  CAMBIO, INC.
                      CONDENSED CONSOLIDATED BALANCE SHEET
                                 March 31, 1999
                                   (Unaudited)

                                     ASSETS

Current assets:
 Accounts receivable - net of allowance
   for doubtful accounts of $255,739                               $    245,000
 Prepaids and deposits                                                   47,000
                                                                   ------------

    Total current assets                                                292,000
Property and equipment, net                                             109,000
Other assets:
 Goodwill, net                                                        4,283,000
                                                                   ------------
     Total assets                                                  $  4,684,000
                                                                   ============

LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities:
 Bank Overdraft                                                    $    180,000
 Short-term borrowings and notes payable                                614,000
 Accounts payable - trade                                             1,631,000
 Accrued expenses                                                       495,000
 Deferred revenue and customer deposits                                 119,000
                                                                   ------------
     Total current liabilities                                        3,039,000

Long term obligations                                                   250,000
Stockholders' equity:
  Stock, Common and Preferred, and Paid in Capital                 $ 19,732,000
 Accumulated deficit                                                (18,337,000)
                                                                   ------------
      Total stockholders' equity                                      1,395,000
                                                                   ------------

      Total liabilities and stockholders' equity                   $  4,684,000
                                                                   ============

The accompanying notes are an integral part of this statement

                                        3

<PAGE>


<TABLE>
                                                            CAMBIO, INC.
                                          CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                                             (Unaudited)

<CAPTION>
                                                                      Three Months Ended                  Nine Months Ended
                                                                           March 31,                            March 31,
                                                               ------------------------------        ------------------------------
                                                                  1999               1998                1999               1998
                                                               -----------        -----------        -----------        -----------
<S>                                                            <C>                <C>                <C>                <C>        
Net revenue                                                    $   373,000                           $   760,000
Cost of sales                                                      171,000                               244,000
                                                               -----------                           -----------        
     Gross profit                                                  202,000                               516,000

Selling, general and administrative expenses                     1,271,000        $   697,000          3,751,000        $ 1,114,000
Research and development expense                                    60,000                               313,000

     Loss from operations                                       (1,129,000)          (697,000)        (3,548,000)        (1,114,000)
                                                               -----------        -----------        -----------        -----------
Other income (expense):
 Interest and other income                                                             46,000                               127,000
 Interest expense                                                  (35,000)            (3,000)           (62,000)           (16,000)
                                                               -----------        -----------        -----------        -----------
     Total other income (expense)                                  (35,000)            43,000            (62,000)           111,000
                                                               -----------        -----------        -----------        -----------

     Loss before discontinued operations                        (1,164,000)          (654,000)        (3,610,000)        (1,003,000)
                                                               -----------        -----------        -----------        -----------
     Income (loss) from operations of
       Discontinued businesses                                    (170,000)          (147,000)          (170,000)           646,000
                                                               -----------        -----------        -----------        -----------

     Net income (loss)                                         $(1,334,000)       $  (801,000)       $(3,780,000)       $  (357,000)
                                                               ===========        ===========        ===========        ===========
Basic and diluted net (loss) per common share
  Continuing operations                                        $     (0.31)       $     (0.34)       $     (1.04)       $     (0.52)
                                                               ===========        ===========        ===========        ===========
Basic and diluted net income per common
  share - discontinued operations                              $     (0.04)       $     (0.08)        $    (0.05)       $      0.34
                                                               ===========        ===========        ===========        ===========
 Basic and diluted net income (loss) per
   Common share                                                $     (0.35)       $     (0.42)       $     (1.09)       $     (0.18)
                                                               ===========        ===========        ===========        ===========
Weighted average shares outstanding                              3,832,000          1,907,000          3,488,000          1,923,000

<FN>
                                   The accompanying notes are an integral part of these statements
</FN>
</TABLE>

                                                                 4

<PAGE>


                                  CAMBIO, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)


                                                          Nine Months Ended
                                                             March 31,
                                                             ---------
                                                         1999            1998
                                                     -----------    -----------
Cash flows from operating activities:                $(1,954,000)   $    44,000

Cash flows from investing activities:                   (745,000)     1,048,000

Cash flows from financing activities:                  1,375,000       (473,000)

Net change in cash and cash equivalents               (1,324,000)       619,000

Cash and cash equivalents at beginning of period       1,324,000      2,929,000
                                                     -----------    -----------
Cash and cash equivalents at end of period           $         0    $ 3,548,000
                                                     ===========    ===========

         The accompanying notes are an integral part of these statement

                                       5

<PAGE>


                                  CAMBIO, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

1.   The accompanying  condensed  consolidated  financial  statements of Cambio,
     Inc., formerly Meadowbrook  Rehabilitation Group, Inc. and its subsidiaries
     (collectively, the "Company") for the three and nine months ended March 31,
     1999 and 1998 have been prepared on the same basis as the audited financial
     statements.  In the  opinion  of  management,  such  unaudited  information
     includes all adjustments  (consisting  only of normal  recurring  accruals)
     necessary for a fair  presentation of this interim  information.  Operating
     results and cash flows for interim periods are not  necessarily  indicative
     of results for the entire  year.  The  information  included in this report
     should  be  read  in  conjunction  with  the  Company's  audited  financial
     statements  and notes thereto  included in the  Company's  Annual Report on
     Form  10-KSB  for the year ended June 30,  1998  previously  filed with the
     Securities and Exchange Commission.

2.   Cambio,  Inc.  is a  global  leader  in  telecommunications  infrastructure
     management.  The company supplies  software and  professional  services for
     Operations  Support  Systems  (OSS) of  telecommunications  industries  and
     general enterprise networks. Our flagship product, netRunner(TM)is designed
     to improve  telecommunications  service providers' return on capital assets
     and their time to service metrics.  It was introduced late October 1998. It
     allows service providers the ability to quickly build, provision,  and view
     networks and their utilization.  It integrates with other applications such
     as Hewlett  Packard's  OpenView  and OEMF.  It runs on Windows  95/98(TM)or
     Windows  NT(TM)operating  systems and supports industry standard relational
     database,  Oracle,  running on Windows or UNIX  environments.  Through  the
     Company's  subsidiary,  Cambio  Networks,  Inc., it also  provides  systems
     support and consulting to customers using its COMMAND product.

     Prior  to  Fiscal 1999  the  Company  provided  outpatient, home health and
     traditional acute,  sub-acute and post-acute  comprehensive  rehabilitation
     services   through  its  various   subsidiaries.   These   operations  were
     discontinued effective June 30, 1998.

     On February 2, 1999,  the Company  entered into an agreement  with Imperial
     Loan Management  Corporation  ("Imperial")  whereby the Company sold all of
     the  issued  and   outstanding   stock  of  its   discontinued   healthcare
     subsidiaries (the  "Subsidiaries")  to Imperial.  As part of the agreement,
     Imperial will use its best efforts to liquidate  each of the  Subsidiaries,
     settling  outstanding  obligations  and  collecting  all amounts  due.  The
     Company remains a guarantor of the Subsidiaries'  outstanding indebtedness,
     which approximates  $680,000 as of May 18, 1999, and is entitled to receive
     one-half of proceeds received after payment of all expenses,  including the
     outstanding indebtedness.  In connection with this transaction, the Company
     recorded a charge to write-off the net asset  remaining  from  discontinued
     operation.

                                       6

<PAGE>


                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

RECENT EVENTS

Disposition of Healthcare Operations

         Prior  to  June  30,   1998,   Cambio,   Inc.,   formerly   Meadowbrook
Rehabilitation Group, Inc. and its subsidiaries (collectively,  the "Company" or
"Cambio") provided outpatient, home health, and traditional acute, sub-acute and
post-acute comprehensive  rehabilitation services. Since the beginning of Fiscal
1997, and as a result of poor operating results and poor prospects for growth in
their respective  markets,  the Company has sold or closed all of its healthcare
operating  assets.  As of June 30, 1998, the Company's  assets  consisted almost
exclusively of cash and accounts receivable.

         The  termination of the Company's  healthcare  operations was completed
during the fourth  quarter of Fiscal 1998 after its Board of Directors  approved
the closure or disposal of its home health  agencies in Colorado  and Kansas and
physical therapy clinics in Colorado. The closing and/or sale of such operations
were substantially completed on June 30, 1998.

         The estimated loss on the disposition of these facilities recognized in
the Company's statements of operations for the year ended June 30, 1998 ("Fiscal
1998")  includes the writedown of property and  equipment to market  value,  the
write-off of goodwill,  closedown  expenses and the operating losses through the
disposition date.

         On  February  2, 1999,  the  Company  entered  into an  agreement  with
Imperial Loan Management  Corporation  ("Imperial") whereby the Company sold all
of the issued and outstanding stock of its discontinued  healthcare subsidiaries
(the  "Subsidiaries") to Imperial.  As part of the agreement,  Imperial will use
its best efforts to liquidate  each of the  Subsidiaries,  settling  outstanding
obligations  and collecting all amounts due. The Company  remains a guarantor of
the Subsidiaries'  outstanding  indebtedness,  which approximates $680,000 as of
May 18, 1999,  and is entitled to receive  one-half of proceeds  received  after
payment of all expenses,  including the outstanding indebtedness.  In connection
with this transaction,  the Company recorded a charge to write-off the net asset
remaining from discontinued operations.

Acquisition of Cambio Networks, Inc.

         On September  14, 1998,  the Company  acquired  Cambio  Networks,  Inc.
("Cambio  Networks"),  pursuant to an Agreement and Plan of Merger,  dated as of
April 3, 1998, as amended by the  Agreement of  Amendment,  dated as of July 27,
1998 (collectively, the "Agreement"). Under the terms of the Agreement, Cambio's
shareholders  received an aggregate 1,238,842 of shares of the Company's Class A
Common Stock  representing  approximately  32.3% of the outstanding  Class A and
Class B Common Stock. From the date of the acquisition, the Company's operations
consist solely of the acquired operations. Accordingly, the Company's historical
results of operations are not comparable to its future operating results.

                                       7

<PAGE>


Delisting of Class A Common Stock From NASDAQ

         On October 20, 1998, the Company  received  notice of a decision by the
NASDAQ Stock Market to delist the Company's Class A Common Stock from the NASDAQ
National  Market  effective  with the close of  business  on October  20,  1998.
Additionally,  at that time,  the Company did not meet,  and currently  does not
meet, the  requirements to transfer its listing to the NASDAQ  SmallCap  Market.
Accordingly, trading in the Company's Class A Common Stock is being conducted on
the OTC Bulletin Board.

Name and Trading Symbol Change

         On  October  20,   1998,   Meadowbrook   Rehabilitation   Group,   Inc.
("Meadowbrook"),  changed its name to Cambio,  Inc. The name change was effected
by merging its wholly owned  subsidiary,  Cambio  Acquisition  Corporation  into
Meadowbrook,  and simultaneously  changing its name to Cambio, Inc. In addition,
the trading  symbol changed to CAMB and its new CUSIP number is 13200N 10 0. The
name change will serve to better reflect the development plans, current business
model, and future objectives of the organization.

Sale of Preferred Stock

         On January 31, 1999,  the  Company's  Board of Directors  (the "Board")
approved  the  issuance of up to 37,500  shares of a newly  created  Convertible
Preferred Stock initially  designated as Series A but now designated as Series B
(the "Preferred Stock") for $100.00 per share, an aggregate  consideration of up
to $3,750,000.  Each share of Preferred Stock is convertible  into 500 shares of
the Company's Class A Common Stock or $0.20 per share and is entitled to receive
dividends in an amount equal to the equivalent  per share  dividend  declared on
the Class A Common  Stock when and as  declared  by the Board of  Directors.  On
February 3, 1999,  Frederick Adler and Euro-America II, L.P.  (collectively  the
"Investor Group") converted certain  indebtedness owing to them from the Company
in the  aggregate  amount of  $1,057,318  into  10,573  shares of the  Company's
Preferred  Stock.  Upon  conversion  the  Investor  Group  would  be  issued  an
equivalent  of  5,286,590  shares of the  Company's  Class A Common  Stock.  The
Investor  Group  also  purchased  an  additional  $425,000  or 4,250  shares  of
Preferred  Stock,  which upon  conversion  the Investor Group would be issued an
equivalent of 2,125,000  shares of the Company's  Class A Common Stock. On April
29, 1999,  the Board  approved the issuance of an  additional  62,500  shares of
Preferred  Stock.  As of May 18,  1999,  the  company has sold a total of 51,073
shares of Preferred Stock.

Management Changes

         On February 3, 1999, Harvey Wm. Glasser,  ("Dr. Glasser") the Company's
former  Chairman and Chief  Executive  Officer,  exchanged each share of Class B
Common  Stock held by him for one share of Class A Common  Stock of the Company,
and resigned  from his position as Chief  Executive  Officer and Chairman of the
Board. On that same day, Mr. Ali Al-Dahwi was appointed Chief Executive  Officer
and Mr.  John P.  McCracken  resigned  from the Board.  The  Company  has yet to
appoint a Chairman of the Board.  On March 10, 1999, Dr.  Glasser  resigned from
the Board.

Forward-looking Statements

         In addition to the historical  information  contained herein, this Form
10-QSB  contains  forward-looking  statements  within  the  meaning of the "safe
harbor"  provisions  of the Private  Securities  Litigation  Reform Act of 1995.
These  forward-looking  statements  are  subject  to  risks  and  uncertainties,
including risks and  uncertainties  set forth in this Form 10-QSB that may cause
actual results to differ materially. These forward-looking statements speak only
as of the date hereof.  The Company disclaims any intent or obligation to update
these forward-looking statements.

                                       8

<PAGE>


RESULTS OF OPERATIONS

Three  months  ended March 31, 1999 as Compared to Three  months ended March 31,
1998

         Net  revenues  from  continuing  operations  for the three months ended
March 31, 1999 ("Third  Quarter  Fiscal 1999") were  $373,000.  Revenues for the
same period last year were comprised only of  discontinued  operations.  The net
loss for the Third Quarter Fiscal 1999 was $1,334,000 or $0.35 per share and was
primarily due to expenses  associated with the  development and  introduction of
the Company's new flagship product, netRunner.

Nine months ended March 31, 1999 as Compared to Nine months ended March 31, 1998

         Net revenues for the Nine Months  Fiscal 1999 were  $760,000.  Revenues
for the same period last year were  comprised only of  discontinued  operations.
Revenues for the current period include Cambio Networks operations following its
acquisition in September 1998.

         During  the  month  of  January  1999  the  Company  entered  into  two
agreements to license its netRunner  operations  support  system with two global
telecommunications  companies. These agreements will generate over $1,000,000 in
revenues comprised of license,  professional  services and support fees over the
next 15 months. Cambio first introduced its flagship product, netRunner, in late
October 1998, and a few months later was selected by Hewlett-Packard,  a leading
global  provider  of  computing  solutions,  as a  subcontractor  to provide the
software  and  professional  services in  connection  with these  projects.  The
Company believes it will continue to see more orders from Hewlett-Packard in the
near future as it cultivates and solidifies its global presence.

         netRunner  is  designed  to run under  Windows  95, 98 or NT  operating
systems  using  current  development  technologies.  Extensions to netRunner are
continuously  being developed to allow the product to integrate and interface to
other commonly used third party network element management products,  help desks
and data bases allowing the Company's  customers to  economically  implement the
plan  and  design  of  their  network  and  manage   increasing   network  costs
effectively.

         Immediately  following the  acquisition of Cambio Networks in September
1998,  the Company  implemented a  restructuring  plan involving the closing and
relocating of Cambio  Networks'  headquarters  from  Bellevue,  Washington to an
already  existing office in Dallas,  Texas.  In addition,  the Company moved its
research and  development  offices to El Paso,  Texas and it assimilated  Cambio
Networks'   finance  and  accounting   functions   into  its  already   existing
capabilities  in Emeryville,  California.  The Company  maintained its sales and
service  offices  domestically  in  Parsippany,  New Jersey until its closure in
December 1998. The sales and services  offices are currently in Washington D.C.,
Dallas,  TX, and El Paso,  TX in the U.S. and  internationally  in Egypt and the
United Kingdom. In an effort to further consolidate its operations,  in February
1999 it decided to close its Emeryville,  California office and move all finance
and administrative functions to its El Paso, Texas office.

         Selling,  general and  administrative  ("SG&A")  expenses  for the Nine
Months  Fiscal  1999 were  $3,751,000  a 237%  increase  from SG&A  expenses  of
$1,114,000  for the Nine Months  Fiscal 1998.  The increase in SG&A expenses was
primarily due to increased expenses  associated with launching netRunner coupled
with the  closure  and or  relocation  of its  offices  as  described  above and
amortization of the goodwill associated with the acquisition of Cambio Networks.
SG&A  expenses for the Nine Months  Fiscal 1998 include only the  administrative
costs not associated with the discontinued operations.

         Research and  development  ("R&D")  expense for the Nine Months  Fiscal
1999 was $313,000.  The Company  incurred R&D expenses  primarily as a result of
its new product development.

                                        9

<PAGE>


         Net  interest  expense for the Nine  Months  Fiscal 1999 was $62,000 as
compared to a net interest  expense of $16,000 for the Nine Months  Fiscal 1998.
The increase  relates to debt  assumed in the  acquisition  of Cambio  Networks'
interest expense on its existing debt.

LIQUIDITY AND CAPITAL RESOURCES

         At March  31,  1999,  the  Company  had  negative  working  capital  of
$2,747,000,  compared to working  capital of  $2,176,000  at June 30, 1998.  The
Company's working capital position decreased following the acquisition of Cambio
Networks due to the  consolidation  of accounts and the elimination  receivables
from the subsidiary . The Company had no cash and cash  equivalents at March 31,
1999, as compared to $1,324,000 at June 30, 1998. The Company's cash and working
capital  position  decreased due to loans made to Cambio  Networks  prior to the
closing of the acquisition and the continued funding of the operations after the
closing of the acquisition.

         During the Nine Months Fiscal 1999, the Company's operating  activities
used cash of $1,954,000, as compared to cash provided by operating activities of
$44,000  during  the same  period in the prior  fiscal  year.  The cash used for
operating  activities during the Nine Months Fiscal 1999 is primarily the result
of the losses incurred.

         As of June 30, 1998, the Company had net operating  loss  carryforwards
of  approximately  $8,500,000.  Availability of the Company's net operating loss
carryforwards  if not  utilized  will expire at various  dates  through the year
2013.  Utilization of net operating loss carryforwards may be limited due to the
recent sales of its preferred stock.

         The  Company   has  no  current   material   commitments   for  capital
expenditures.  The Company also expects to make routine capital  improvements to
its facilities in the normal course of business.

         The Company's current operations are cash flow negative and as of March
31, 1999, the Company had negative  working  capital of $2,283,000.  The Company
will need additional  capital to fund its operations.  There can be no assurance
that capital will be available,  or that,  if  available,  it can be obtained on
terms  favorable  to the  Company.  If  adequate  funds are not  available,  the
Company's  liquidity  could be  impaired,  which  would have a material  adverse
effect on its business.

         In May 1999 the Company  completed the sale of $3.6 million of Series B
Convertible   Preferred   Stock  through  direct   purchase  and  conversion  of
indebtedness.

         Inflation  in  recent  years  has not had a  significant  effect on the
Company's  business and is not  expected to adversely  effect the Company in the
future unless the current rate of inflation increases significantly.

Other Factors That May Affect Future Operating Results

         Cambio   Networks  has  incurred   significant  net  losses  since  its
inception.  There can be no assurance that the Company will be profitable in any
future period. The Company's business will also subject to the risks inherent in
the  operation  of a new business  enterprise,  and there can be no assurance it
will be able to successfully address such risks.

         Fluctuating  Operating  Results.  Factors that may contribute to future
fluctuations in the Company's  quarterly and annual  operating  results include,
but are not  limited  to: (i)  development  and  introduction  of new  operating
systems and new product development  expenses;  (ii) introduction or enhancement
of products by the Company;  (iii) changes in pricing policies of the Company or
its  competitors;  (iv)  increased  competition;  (v)  technological  changes in
computer  systems  and  environments;  (vi) the ability of the Company to timely
develop,  introduce and market new products;  (vii) quality  control of products
sold;  (viii)  market  readiness  to  deploy  systems  management  products  for
distributed computing  environments;  (ix) market acceptance of new products and
product  enhancements;  (x)  customer  order  deferrals in  anticipation  of new
products and product  enhancements;  (xi) the Company's success in expanding its
sales and marketing programs;  (xii) personnel changes;  (xiii) foreign currency
exchange rates;  (xiv) mix of products sold; (xv)  acquisition  costs; and (xvi)
general economic conditions.

                                       10

<PAGE>


         Intense  Competition.  The  markets in which the Company  competes  are
intensely  competitive,  highly  fragmented  and rapidly  changing.  In order to
compete effectively,  the Company will have to enhance current products, enhance
the  operability  of its products with one another and develop new products in a
timely fashion.

         The  Company  anticipates   continued  growth  in  competition  in  the
telecommunications  industry and  consequently,  the entrance of new competitors
into the  software  systems  market in the future.  To maintain  and improve its
competitive position,  the Company must continue to develop and introduce,  in a
timely and  cost-effective  manner,  new product sets, new product  features and
services and support that keep the Company competitive with its competitors. The
principal competitive factors in the Company's market are quality,  performance,
price,  customer  support  and  training,   business  reputation,   and  product
attributes such as scalability, compatibility,  functionality and acceptance. In
addition,   the  Company   competes  with  a  number  of  companies   that  have
substantially greater financial, technical, sales, marketing and other resources
as well as greater name recognition than the Company. As a result, the Company's
competitors  may be able to adapt more  quickly to new or emerging  technologies
and changes in customer  requirements,  or to devote  greater  resources  to the
promotion and sale of their  products and services  than can the Company.  There
can be no assurance that the Company will be able to compete  successfully  with
its existing competitors or with new competitors.

         Risks Associated With International Operations.  Historically, revenues
from sales outside the United States have accounted for a significant  amount of
Cambio  Networks' total revenues.  The Company believes that its success depends
upon continued expansion of its international operations.  The Company currently
has sales and service  offices in the United  Kingdom  and Egypt.  International
expansion may require the Company to establish additional foreign offices,  hire
additional personnel and recruit additional  international  resellers.  This may
require  significant  management  attention  and  financial  resources and could
adversely affect the Company's  operating margins.  To the extent the Company is
unable to effect these additions efficiently and in a timely manner, its growth,
if any, in  international  sales will be limited,  and its  business,  operating
results and financial condition could be materially  adversely  affected.  There
can be no  assurance  that the  Company  will be able to  maintain  or  increase
international market demand for its products.

         International  operations  subject  the  Company  to a number  of risks
inherent in developing products for sale outside of the United States, including
the potential loss of developed technology, imposition of governmental controls,
export license requirements,  restrictions on the export of critical technology,
political and economic instability, trade restrictions, difficulties in managing
international  operations,  cultural  differences  in the  conduct of  business,
extended accounts receivable  collection cycles,  greater difficulty in accounts
receivable collection, unexpected changes in regulatory requirements and royalty
and withholding  taxes that restrict the  repatriation of earnings,  tariffs and
other trade  barriers,  the burden of  complying  with a wide variety of foreign
laws,  and the risk of  foreign  currency  gains  and  losses.  There  can be no
assurance  that any of the  factors  described  herein  will not have a material
adverse effect on the Company's future  international  sales and operations and,
consequently, its business, operating results and financial condition.

         Reliance on Significant  Customers.  Historically,  Cambio Networks has
generated a significant  portion of its total  revenues from a limited number of
customers,  some of which have exceeded 10% of revenues.  This  concentration of
customers  can cause the  Company's  revenues  and  earnings to  fluctuate  from
quarter  to quarter  based on these  customers'  requirements  and the timing of
their orders.  Although the Company believes it has good  relationships with its
largest  customers  and has in the past  received a  substantial  portion of its
revenues from repeat business with established customers,  none of the Company's
major customers has any obligation to purchase  additional products or services,
and  these  customers  generally  have  acquired  fully-paid  licenses  to their
installed  systems.  Therefore,  there  can  be no  assurance  that  any  of the
Company's  major  customers  will  continue to  purchase  new  systems,  systems
enhancements  and services in amounts  similar to previous  years.  A reduction,
delay or  cancellation  in orders from any of its major  customers  would have a
material  adverse  effect on the Company's  results of operations  and financial
condition. In addition, the acquisition by a third party of one of the Company's
major  customers  could result in the loss of that  customer and have a material
adverse effect on the Company's results of operations and financial condition.

                                       11

<PAGE>


         Rapid  Technological   Change  and  Requirement  for  Frequent  Product
Transitions.  The market for the  Company's  products is intensely  competitive,
highly  fragmented  and  characterized  by  rapid  technological   developments,
evolving  industry  standards  and rapid changes in customer  requirements.  The
introduction  of products  embodying  new  technologies,  the  emergence  of new
industry  standards  or  changes  in  customer  requirements  could  render  the
Company's  existing  products  obsolete  and  unmarketable.  As  a  result,  the
Company's  success  depends  upon its ability to  continue  to enhance  existing
products, respond to changing customer requirements and develop and introduce in
a timely manner, new products that keep pace with technological developments and
emerging industry standards.  Customer requirements include, but are not limited
to,   product   operability   and  support  across   distributed   and  changing
heterogeneous  hardware platforms,  operating systems,  relational databases and
networks.  There can be no assurance  that the  Company's  products will achieve
market  acceptance  or  will  adequately  address  the  changing  needs  of  the
marketplace  or that the Company will be successful in developing  and marketing
enhancements  to  its  existing  products  or  new  products  incorporating  new
technology on a timely basis. The Company has in the past experienced  delays in
product  development,  and there can be no  assurance  that the Company will not
experience further delays in connection with its current product  development or
future development activities. If the Company is unable to develop and introduce
new  products,  or  enhancements  to existing  products,  in a timely  manner in
response to changing market conditions or customer  requirements,  the Company's
business, operating results and financial condition will be materially adversely
affected.  Because the Company has limited resources,  the Company must restrict
its product  development  efforts and its porting efforts to a relatively  small
number of products and operating  systems.  There can be no assurance that these
efforts will be successful or, even if successful,  that any resulting  products
or operating systems will achieve market acceptance.

         Dependence  on Key  Employees.  The Company is highly  dependent on the
principal  members of its  management  staff,  including Mr. Ali  Al-Dahwi,  its
President and Chief Executive  Officer,  the loss of whose services would have a
material adverse effect on the Company's business.  Cambio does not maintain any
key person life insurance policy on the life of any employee. Failure to attract
and retain key personnel  could have a material  adverse effect on the Company's
business, financial condition and results of operations.

         Year 2000 Compliance. The Company is currently evaluating the potential
impact  of the  Year  2000  difficulties  on the  processing  of  date-sensitive
information  by the Company's  computerized  information  system.  The Year 2000
problem  is the  result of  computer  programs  being  written  using two digits
(rather than four) to define the applicable year. Any of the Company's  computer
programs  that have  time-sensitive  software may recognize a date using "00" as
the year 1900 rather than the year 2000,  which could result in  miscalculations
or system failures.  Based on preliminary  information,  the costs of addressing
the  potential  problems are not currently  expected to have a material  adverse
effect on the Company's financial  position,  liquidity or results of operations
in future  periods.  The  software  currently  offered by the  Company is either
designed  to be Year  2000  compliant  or has  been  upgraded  to be  Year  2000
compliant.  However, if the Company, or its customers or vendors,  are unable to
resolve  such  processing  issues in a timely  manner,  it could pose a material
financial risk. Accordingly, the Company plans to devote the necessary resources
to resolve all significant Year 2000 issues in a timely manner.

                                       12

<PAGE>


Part II. Other Information

Item 1.  Legal Proceedings

         None

Item 2.  Changes in Securities

         On January 31, 1999,  the  Company's  Board of Directors  (the "Board")
         approved the issuance of up to 37,500 shares of a newly created  Series
         B Convertible  Preferred Stock (the "Preferred  Stock") for $100.00 per
         share, an aggregate  consideration  of up to $3,750,000.  Each share of
         Preferred Stock is convertible into 500 shares of the Company's Class A
         Common Stock or $0.20 per share and is entitled to receive dividends in
         an amount equal to the equivalent  per share  dividend  declared on the
         Class A Common Stock when and as declared by the Board of Directors. On
         April 29, 1999, the Board approved the issuance of an additional 62,500
         shares of Preferred  Stock.  As of May 18, 1999, the company has sold a
         total of 51,073 shares of Preferred Stock.

Item 3.  Defaults Upon Senior Securities

         None

Item 4.  Submission of Matters to a Vote of Security Holders

         None

Item 5.  Other Information

         None

Item 6.  Exhibits and Reports on Form 8-K

         A. Exhibit No.

            10.4  Certificate  of the  Designations,  Powers,  Preferences,  and
                  Rights of the Series B Convertible Preferred Stock.

            27.1  Financial Data Schedule.

         B. Reports on Form 8-K

            None

                                       13

<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.


Cambio, Inc.



/s/ Ali Al-Dahwi
------------------------------
Ali Al-Dahwi
President and Chief Executive
Officer


/s/ Carolyn J. Durrett
------------------------------
Carolyn J. Durrett
Controller
(Principal Accounting
and Financial Officer)

                                  May 18, 1999

                                       14