<PAGE>
================================================================================

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

                                   ----------

                                    FORM 10-Q


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

         FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2002

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

         FOR THE TRANSITION PERIOD FROM              TO


                          COMMISSION FILE NO. 000-26655

                                   ----------

                            WINK COMMUNICATIONS, INC.
             (Exact name of registrant as specified in its charter)


            DELAWARE                                    94-3212322
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
 incorporation or organization)

                           1001 MARINA VILLAGE PARKWAY
                            ALAMEDA, CALIFORNIA 94501
                                 (510) 337-2950
                                  www.wink.com

         Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter periods 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 [ ]

         The number of shares of the Registrant's Common Stock outstanding as of
April 30, 2002 was 33,293,011.

================================================================================
<PAGE>
                                      INDEX

<Table>
<Caption>
                                                                            PAGE
                                                                            ----
<S>      <C>                                                                <C>
PART I   FINANCIAL INFORMATION

Item 1.  Financial Statements.............................................    3

         Condensed Balance Sheets.........................................    3

         Condensed Statements of Operations...............................    4

         Condensed Statements of Cash Flows...............................    5

         Notes to Condensed Financial Statements..........................    6

Item 2.  Management's Discussion and Analysis of Financial Condition
         and Results of Operations........................................    8

         Risk Factors.....................................................   13

Item 3.  Quantitative and Qualitative Disclosures about Market Risk.......   18

PART II  OTHER INFORMATION

Item 1.  Legal Proceedings................................................   19

Item 2.  Changes in Securities............................................   19

Item 3.  Defaults Upon Senior Securities..................................   19

Item 4.  Submission of Matters to a Vote of Security Holders..............   19

Item 5.  Other Information................................................   19

Item 6.  Exhibits and Reports on Form 8-K.................................   19

Signature.................................................................   20
</Table>


                                       2
<PAGE>

                            WINK COMMUNICATIONS, INC.

                            CONDENSED BALANCE SHEETS
           (DOLLARS AND SHARES IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)


<Table>
<Caption>
                                                                    MARCH 31,   DECEMBER 31,
                                                                      2002         2001
                                                                   ----------- ------------
                                                                   (UNAUDITED)
<S>                                                                <C>         <C>
                                ASSETS

Current Assets:
   Cash and cash equivalents ...................................   $  12,847    $  20,513
   Short-term investments ......................................      51,852       57,434
   Accounts receivable - related parties, net ..................       1,652        2,527
   Accounts receivable - third parties, net ....................         600          670
   Prepaid expenses - related parties ..........................       5,049          615
   Prepaid expenses and other current assets ...................         990          965
                                                                   ---------    ---------
      Total current assets .....................................      72,990       82,724
Property and equipment, net ....................................       2,095        2,090
Deferred charges and other assets - related parties, net .......       3,085          287
Other assets ...................................................       1,292        1,292
                                                                   ---------    ---------

                                                                   $  79,462    $  86,393
                                                                   =========    =========

                 LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
   Accounts payable ............................................   $   1,301    $   1,237
   Accrued liabilities .........................................       2,938        4,353
   Due to related parties ......................................      16,471       14,081
   Deferred revenue - related parties ..........................         601          519
   Deferred revenue - third parties ............................         592          679
                                                                   ---------    ---------
      Total current liabilities ................................      21,903       20,869
                                                                   ---------    ---------

Stockholders' Equity:
   Common Stock, $0.001 par value; 100,000 shares authorized;
      31,289 and 31,205 shares issued and outstanding ..........          31           31
   Additional paid-in capital ..................................     267,137      267,022
   Stockholders' notes receivable ..............................      (1,291)      (1,291)
   Unearned compensation .......................................      (2,629)      (3,064)
   Accumulated deficit .........................................    (205,149)    (197,327)
   Accumulated other comprehensive (loss) income ...............        (540)         153
                                                                   ---------    ---------
      Total stockholders' equity ...............................      57,559       65,524
                                                                   ---------    ---------

                                                                   $  79,462    $  86,393
                                                                   =========    =========
</Table>


            See accompanying notes to condensed financial statements.


                                       3
<PAGE>

                            WINK COMMUNICATIONS, INC.

                       CONDENSED STATEMENTS OF OPERATIONS
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
                                   (UNAUDITED)


<Table>
<Caption>
                                                            THREE MONTHS ENDED
                                                                MARCH 31,
                                                           --------------------
                                                             2002        2001
                                                           --------    --------
<S>                                                        <C>         <C>
Revenues:
    Licenses - related parties .........................   $    176    $     46
    Licenses - third parties ...........................        215         387
    Services - related parties .........................        282          51
    Services - third parties ...........................        374          27
                                                           --------    --------

         Total revenues ................................      1,047         511
                                                           --------    --------

Costs and expenses:
    Revenue sharing and launch fees - related parties ..      2,829       6,382
    Revenue sharing and launch fees - third parties ....        320         378
    Sales and marketing ................................      1,366       2,074
    Operating ..........................................      2,044       2,802
    Product development ................................      1,988       2,423
    General and administrative .........................      1,019       1,348
                                                           --------    --------

         Total costs and expenses ......................      9,566      15,407
                                                           --------    --------

Loss from operations ...................................     (8,519)    (14,896)
Interest income and other, net .........................        697       2,274
                                                           --------    --------
Net loss ...............................................   $ (7,822)   $(12,622)
                                                           ========    ========

Net loss per share:
    Basic and diluted ..................................   $  (0.25)   $  (0.41)
    Weighted average shares used in computing
         both basic and diluted net loss per share .....     31,768      31,065
</Table>


            See accompanying notes to condensed financial statements.


                                       4
<PAGE>

                            WINK COMMUNICATIONS, INC.

                       CONDENSED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)
                                   (UNAUDITED)


<Table>
<Caption>
                                                                                            THREE MONTHS ENDED
                                                                                                MARCH 31,
                                                                                           --------------------
                                                                                             2002        2001
                                                                                           --------    --------
<S>                                                                                        <C>         <C>
Cash flows from operating activities:
   Net loss ............................................................................   $ (7,822)   $(12,622)
   Adjustments to reconcile net loss to net cash used in operating activities:
      Depreciation and amortization of property and equipment ..........................        271         582
      Amortization of deferred charges and other assets ................................          6       2,175
      Stock-based compensation expense .................................................        434       3,420
      Loss on equity investment ........................................................         --          28
      Changes in assets and liabilities:
        Accounts receivable - related parties ..........................................        875       1,732
        Accounts receivable - third parties ............................................         70          48
        Prepaid expenses - related parties .............................................     (4,434)         --
        Prepaid expenses and other current assets ......................................        (25)        514
        Deferred charges and other assets - related parties ............................       (264)     (6,294)
        Other assets ...................................................................         --        (245)
        Accounts payable ...............................................................         64        (311)
        Accrued liabilities ............................................................     (1,415)     (1,472)
        Due to related parties .........................................................       (150)        179
        Deferred revenue - related parties .............................................         82        (597)
        Deferred revenue - third parties ...............................................        (87)        (26)
                                                                                           --------    --------

Net cash used in operating activities ..................................................    (12,395)    (12,889)
                                                                                           --------    --------

Cash flows from investing activities:
   Net proceeds from sales of short-term investments ...................................      4,887      25,982
   Purchase of property and equipment ..................................................       (276)       (891)
                                                                                           --------    --------

Net cash provided by investing activities ..............................................      4,611      25,091
                                                                                           --------    --------

Cash flows from financing activities:
   Proceeds from issuance of Common Stock ..............................................        118         421
                                                                                           --------    --------

Net cash provided by financing activities ..............................................        118         421
                                                                                           --------    --------

Net (decrease) increase in cash and cash equivalents ...................................     (7,666)     12,623
Cash and cash equivalents at beginning of period .......................................     20,513      22,093
                                                                                           --------    --------
Cash and cash equivalents at end of period .............................................   $ 12,847    $ 34,716
                                                                                           ========    ========

Schedule of supplemental non-cash investing and financing activities:
Repurchase of Common Stock and cancellation of related stockholder note receivable .....   $     --    $  1,208
                                                                                           ========    ========
Common Stock issued for services .......................................................   $     --    $    585
                                                                                           ========    ========
Accrual for Common Stock to be issued to related party distribution partners ...........   $  2,540    $     --
                                                                                           ========    ========
</Table>


            See accompanying notes to condensed financial statements.


                                       5
<PAGE>

                            WINK COMMUNICATIONS, INC.

                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                                 MARCH 31, 2002
                                   (UNAUDITED)


NOTE 1 - THE COMPANY AND BASIS OF PRESENTATION

         Wink Communications, Inc. (the "Company") was incorporated in
California on October 7, 1994 and reincorporated in Delaware on August 12, 1999.
The Company offers an enhanced television broadcasting system that adds
interactivity and electronic commerce opportunities to traditional television
programming and advertising.

         The accompanying unaudited condensed financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and in accordance with the rules and regulations of the
Securities and Exchange Commission. In the opinion of management they reflect
all adjustments, consisting only of normal recurring adjustments, necessary for
a fair presentation of such information. The condensed balance sheet data as of
December 31, 2001 is derived from the audited financial statements as of and for
the year then ended and does not include all notes and disclosures required by
accounting principles generally accepted in the United States of America for
complete financial statements. Accordingly, these financial statements should be
read in conjunction with the financial statements, accompanying notes and
Management's Discussion and Analysis of Financial Condition and Results of
Operations included in the Company's Annual Report on Form 10-K for the year
ended December 31, 2001. The results of operations for the interim period ended
March 31, 2002, are not necessarily indicative of results to be expected for the
full year or any other period.

RECLASSIFICATIONS

         Certain prior period balances have been reclassified to conform to the
current period presentation.

NOTE 2 - NET LOSS PER SHARE

         Basic net loss per share is computed using the weighted average number
of common shares outstanding. Diluted net loss per share is computed using the
weighted average number of common and potential common shares outstanding.
Potential common shares consist of unvested restricted common shares and common
shares issuable upon the exercise of stock options and warrants (using the
treasury stock method). Potential common shares are excluded from the
computation if their effect is anti-dilutive.


                                       6
<PAGE>

                            WINK COMMUNICATIONS, INC.

              NOTES TO CONDENSED FINANCIAL STATEMENTS--(CONTINUED)


         The following table sets forth the computation of basic and diluted net
loss per share for the periods indicated (in thousands, except per share
amounts):

<Table>
<Caption>
                                                         THREE MONTHS ENDED
                                                              MARCH 31,
                                                       ------------------------
                                                         2002            2001
                                                       --------        --------
<S>                                                    <C>             <C>
Numerator:
    Net loss ...................................       $ (7,822)       $(12,622)
                                                       ========        ========

Denominator:
    Weighted average shares ....................         31,768          31,071
    Weighted average unvested shares
         subject to repurchase .................             --              (6)
                                                       --------        --------
Denominator for basic and diluted ..............         31,768          31,065
                                                       ========        ========

Net loss per share:
    Basic and diluted ..........................       $  (0.25)       $  (0.41)
                                                       ========        ========
</Table>

Outstanding potential shares excluded from the determination of diluted net loss
per share as their effect is anti-dilutive, are as follows (in thousands):

<Table>
<Caption>
                                                                 MARCH 31,
                                                           ---------------------
                                                            2002           2001
                                                           ------         ------
<S>                                                        <C>            <C>
Common Stock options .............................          2,466          5,813
Common Stock warrants ............................          5,946          4,946
Common Stock subject to repurchase ...............             --              5
                                                           ------         ------
    Total ........................................          8,412         10,764
                                                           ======         ======
</Table>

NOTE 3 - RECENT ACCOUNTING PRONOUNCEMENTS

         In April 2001, the Financial Accounting Standards Board's ("FASB")
Emerging Issues Task Force ("EITF") reached consensus on Issue No. 00-25,
"Vendor Income Statement Characterization of Consideration Paid to a Reseller of
the Vendor's Products" ("EITF 00-25"). In November 2001, the EITF reached
consensus on Issue No. 01-9, "Accounting for Consideration Given by a Vendor to
a Customer or a Reseller of the Vendor's Products" ("EITF 01-9"). EITF 00-25 and
EITF 01-9 require that consideration, including equity instruments, given to a
customer should be classified in the vendor's income statement as a reduction of
revenue unless the consideration relates to a separable identifiable benefit
received from the customer and the fair value of such benefit can be reasonably
estimated. The Company typically gives to its distributors various incentives
including revenue guarantees, launch funds and warrants. The Company adopted
EITF 00-25 and EITF 01-9 in the first quarter of fiscal year 2002. In accordance
with the transition guidance, financial statements for prior periods presented
for comparative purposes were reclassified to comply with the new income
statement presentation requirement which resulted in a reclassification from
revenue to revenue sharing and launch fees expense of approximately $1,193,000
for the quarter ended March 31, 2001. The adoption of EITF 00-25 and EITF 01-9
had no impact on the Company's operating loss, net loss or net loss per share.


                                       7
<PAGE>

                            WINK COMMUNICATIONS, INC.

              NOTES TO CONDENSED FINANCIAL STATEMENTS--(CONTINUED)


         In October 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets". SFAS 144 supercedes SFAS 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed Of" and amends Accounting Principles Board Opinion No. 30,
"Reporting Results of Operations Reporting the Effects of Disposal of a Segment
of a Business". The Company adopted SFAS 144 in the quarter ended March 31,
2002. The adoption of SFAS 144 did not have a significant impact on its
financial statements.

NOTE 4 - COMPREHENSIVE INCOME (LOSS)

         Comprehensive income (loss) includes all changes in equity during a
period from non-owner sources. The primary differences between net loss and
comprehensive loss is due to the unrealized gains or losses on
available-for-sale securities. Comprehensive loss for the three months ended
March 31, 2002 was $8.5 million as compared to a reported net loss of $7.8
million. Comprehensive loss for the three months ended March 31, 2001 was $13.1
million as compared to a reported net loss of $12.6 million.

NOTE 5 - CONCENTRATION

         At March 31, 2002, three related party customers accounted for 37%, 18%
and 12% of the net accounts receivable balance, respectively. During the three
months ended March 31, 2002, transactions with a related party accounted for 40%
of the Company's total revenues, respectively.

NOTE 6 - STOCK OPTION EXCHANGE PROGRAM

         In December 2001, the Company offered the Offer to Exchange Certain
Outstanding Options for New Options (the "New Offer Program"). The New Offer
Program offered current Company employees with stock options granted under
either the 1994 or 1999 Plan the opportunity to tender certain granted options,
with an exercise price of at least $4.25 per share, in exchange for the
Company's promise to grant replacement options at a exercise price equal to the
closing price of the Company's Common Stock on the Nasdaq National Market on or
about July 31, 2002. Generally, for every three options that an employee
tendered to the Company, he or she received a promise from the Company to grant
two options on or about July 31, 2002; the share ratio could vary depending on
the grant date of the tendered option. The New Offer Program, which expired on
January 28, 2002, resulted in the cancellation of 3,092,000 options at a
weighted average exercise price of $11.50 per share and the promise to grant
2,085,000 options. The new options will have terms and conditions that are
substantially the same as those of the cancelled options. The New Offer Program
is not expected to result in any additional compensation charges or variable
plan accounting.

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

         The discussion in this Report on Form 10-Q contains certain trend
analysis and other forward-looking statements within the meaning of the federal
securities laws, particularly statements referencing future sources of revenue,
the expected increase in the number of Wink-enabled households and the expected
increase in revenue sharing and launch fees as well as trends in other costs and
expenses. Words such as "anticipate," "believe," "plan," "estimate," "expect,"
"seek," and "intend," and words of similar importance are intended to identify
such forward-looking statements. These forward-looking statements are based on
current expectations as of today only and involve risks and uncertainties.
Actual results may differ materially from those expressed or forecasted in the
forward-looking statements as a result of certain risks and uncertainties,
including, but not limited to, economic and advertising market variables, the
rate in which Wink Enhanced Broadcasting is deployed and acceptance of Wink
Enhanced Broadcasting by consumers, those risks and uncertainties set forth in
this discussion under "Risk Factors" and other risks detailed from time to time
in reports filed with the Securities and Exchange Commission. In addition,
factors that could cause or contribute to such differences include, but are not
limited to, those discussed in our Annual Report on Form 10-K for the fiscal
year ended December 31, 2001 (the "Form 10-K"). The following discussion should
be read in conjunction with the section entitled "Risk Factors" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" in the Form 10-K.

OVERVIEW

         Wink Communications was founded in 1994 and our activities to date have
primarily consisted of:

         o        developing and adapting our technology for operation in
                  advanced analog and digital set-top boxes;

         o        licensing our Wink Studio authoring tool software to major
                  broadcast and cable networks, third-party developers and
                  advertisers to enable them to develop the Wink Service;


                                       8
<PAGE>

         o        licensing our Wink Server software to broadcast and cable
                  networks and cable system and satellite system operators to
                  incorporate Wink enhancements into their television
                  programming;

         o        developing the Wink Response Network for collecting and
                  managing responses to the Wink Service;

         o        marketing the concept of the Wink Service and promoting the
                  Wink icon; and

         o        establishing relationships with and licensing our technology
                  to key television industry participants.

         Sources of Revenue and Business Plan. Through March 31, 2002, our
revenues have been primarily derived from non-recurring and consulting
engineering and installation services under agreements to integrate the Wink
technology with various set-top boxes and from license fees for the use of Wink
software. Our business plan is to derive the primary portion of our future
revenues from the Wink Response Network by charging transaction fees to
advertisers, merchants and broadcast network and cable programmers for each
information request or purchase order obtained from viewers who respond to Wink
Enhanced Broadcasting and to provide data analysis and reporting services
related to those responses. The Wink Response Network was activated on a limited
basis in the second half of 1998. For the three months ended March 31, 2002, 28%
of our total revenues were derived from interactive advertising using the Wink
Response Network, in the form of transactions, reports and sponsorship fees.
However, the majority of the revenues we have earned from advertisers and
merchants utilizing the Wink Response Network prior to the three months ended
March 31, 2002 have been related to charter advertising agreements that provide
for a flat fee to be paid in lieu of transaction fees. These fees have been
recognized ratably over the life of the advertising agreement, generally one
year. We have also entered into agreements with advertisers and merchants that
will pay fees on a transaction fee and report basis, and we expect to enter into
more of these agreements in the future. We also launched dedicated interactive
and virtual channels in 2001 and have begun to derive revenue from sales of
products on these channels, and while the revenue earned from these channels was
insignificant for the three months ended March 31, 2002, we expect to see growth
in this revenue in future years.

         Due to the downturn in the economy, specifically in the advertising
industry, we have not experienced the significant increase in transaction and
reporting fees we had expected. In addition, we do not currently have
substantial commitments from advertisers. To date, the majority of our revenue
has been derived from non-recurring consulting engineering and installation
services. Non-recurring consulting engineering projects are a result of specific
customer requests and therefore there is no assurance we will obtain
revenue-producing engineering projects in the future. See "Risk Factors".

         Revenue Sharing and Launch Fees. Revenue sharing and launch fees
include the distribution costs related to our agreements with cable and
satellite system operators, broadcast network and cable programmers and other
market participants to deploy the Wink Service to their subscribers and viewers.
Because the revenue guarantees and marketing and launch funds are contingent
upon households deployed with the Wink Service or the commercial launch of the
Wink Service by a distributor, where applicable, we are obligated to pay the
revenue guarantees and marketing and launch funds regardless of whether any
revenue is earned from transaction fees or data analysis and reporting services.
See "Liquidity and Capital Resources" and "Risk Factors" below. While we believe
that the number of Wink-enabled households will continue to increase in the
future, we do not believe revenue sharing and launch fees expenses will increase
because we amended three of our significant distribution partner agreements to
decrease future payments of revenue guarantees and marketing deployment funds in
February and March 2002. See "Liquidity and Capital Resources" section below. We
have also significantly decreased future amortization of deferred charges and
unearned compensation related to warrants due to the impairment charge taken in
the fourth quarter of 2001.

         Sales and Marketing. Sales and marketing expense includes salaries,
non-cash charges for employee stock-based compensation, consulting fees,
travel-related costs, allocated facilities-related expenses, and advertising
expenses associated with our sales and consumer marketing departments. Sales and
marketing expense also includes costs related to marketing materials, commercial
spots and training for the launch of Wink Enhanced Broadcasting in new cable
systems. We expect sales and marketing expense to increase in the future as
additional marketing and advertising costs are incurred to support anticipated
growth.


                                       9
<PAGE>

         Operating. Operating expense includes costs associated with our
operations departments, including personnel costs, expenses related to our
internal information systems, allocated facilities-related expenses and costs of
operating the Wink Response Network, including processing and telecommunication
costs and payments to third-party consultants and customer service
representatives. While we expect significant growth in deployments, we
anticipate operating expense related to deployments to remain relatively
constant due to sizable decreases in telecommunications rates. We also expect a
significant decrease in depreciation expense due to smaller equipment
expenditures as a result of a change in our customer contracts, which now
provide that equipment is generally the responsibility of the customer, and from
the decrease in the carrying value of deployment equipment due to the impairment
charge of $2.3 million recorded in the fourth quarter of 2001.

         Product Development. Product development expense includes costs
associated with our engineering and business development departments, including
personnel costs, allocated facilities-related expenses, non-cash charges for
employee stock-based compensation and fees to third-party consultants. Costs of
developing the Wink technology to be incorporated in several different set-top
box platforms for both our cable and direct broadcast satellite system operators
and continued work on enhancing our proprietary automated Wink Response Network
comprise a significant portion of product development expenses. We expect
product development expense to remain relatively constant but we may need to
expend additional resources to meet certain product launch targets.

         General and Administrative. General and administrative expense includes
administrative and executive personnel costs, allocated facilities and
information technology charges, legal expenses for general corporate and
intellectual property purposes, investor relations costs associated with being a
public company and non-cash charges for employee stock-based compensation. We
believe that as operations continue to increase in size and scope, general and
administrative expenses will remain relatively constant.

         We have incurred net losses since inception and, at March 31, 2002, had
an accumulated deficit of $205.1 million. We may never achieve favorable
operating results or profitability. See "Risk Factors --We have a history of
losses and expect future losses."

RESULTS OF OPERATIONS

         Since inception, we have been engaged primarily in the development and
licensing of the Wink Service. Accordingly, our historical results of operations
may not be indicative of and should not be relied upon as an indicator of future
performance.

THREE MONTHS ENDED MARCH 31, 2002 AND 2001

REVENUES

         Total revenues increased 105% to $1.0 million for the three months
ended March 31, 2002, compared to $511,000 for the three months ended March 31,
2001. The increase resulted primarily from an increase in service revenue of
$578,000. The increase in service revenue was primarily attributable to
engineering consulting and installation services and transaction fee revenues
totaling $656,000 for the three months ended March 31, 2002, compared to $78,000
for the three months ended March 31, 2001. During the three months ended March
31, 2002, transactions with a related party accounted for 40% of our total
revenues.

COSTS AND EXPENSES

         Total costs and expenses decreased 38% to $9.6 million for the three
months ended March 31, 2002, compared to $15.4 million for the three months
ended March 31, 2001. The $5.8 million decrease was primarily a result of
decreased revenue guarantees and launch fees due to the amendment of three
distribution partner agreements, expense management, and a reduction in the
amortization of deferred charges and unamortized compensation for warrants
related to distribution agreements as a result of the impairment charge recorded
in the fourth quarter of 2001.


                                       10
<PAGE>

         Costs and expenses include non-cash charges for stock-based
compensation and warrant amortization as follows:

<Table>
<Caption>
                                                           THREE MONTHS ENDED
                                                               MARCH 31,
                                                         -----------------------
                                                           2002         2001
                                                         ----------   ----------
<S>                                                      <C>          <C>
Revenue sharing and launch fees - related parties ....   $       --   $2,987,000
Sales and marketing ..................................      198,000      211,000
Product development ..................................      118,000      121,000
General and administrative ...........................      118,000      101,000
                                                         ----------   ----------
                                                         $  434,000   $3,420,000
                                                         ==========   ==========
</Table>

         Revenue Sharing and Launch Fees. Total revenue sharing and launch fees
decreased 53% to $3.1 million for the three months ended March 31, 2002, from
$6.8 million for the three months ended March 31, 2001. The decrease was
primarily due to a $3.0 million decrease in the amortization of unearned
compensation related to warrants as a result of the impairment charge recorded
in the fourth quarter of 2001.

         Sales and Marketing. Sales and marketing expense decreased 34% to $1.4
million for the three months ended March 31, 2002, from $2.1 million for the
three months ended March 31, 2001. The decrease was primarily due to decreases
in personnel-related costs, decreases in advertising costs related to launching
the Wink Service and decreases in consulting expenses as part of our expense
management efforts.

         Operating. Operating expense decreased 27% to $2.0 million for the
three months ended March 31, 2002, from $2.8 million for the three months ended
March 31, 2001. The decrease was primarily due to a decrease in depreciation
expense as a result of the impairment charge recorded in the fourth quarter of
2001. The decrease was also due to decreases in personnel-related costs and
decreases in consulting expenses as part of our expense management efforts.

         Product Development. Product development expense decreased 18% to $2.0
million for the three months ended March 31, 2002, from $2.4 million for the
three months ended March 31, 2001. The decrease was due to decreased engineering
and product development personnel costs and the use of fewer consultants and
temporary employees for product development and testing to launch the Wink
Service compared to the first quarter of 2001.

         General and Administrative. General and administrative expense
decreased 24% to $1.0 million for the three months ended March 31, 2002, from
$1.3 million for the three months ended March 31, 2001. The decrease was
primarily related to decreases in personnel-related costs.

         Interest Income and Other, Net. Interest income and other, net,
decreased 69% to $697,000 for the three months ended March 31, 2002, from $2.3
million for the three months ended March 31, 2001. This decrease was primarily
due to a $1.7 million decrease in interest income due to lower interest rates
and lower average cash and short-term investment balances for the three months
ended March 31, 2002.

LIQUIDITY AND CAPITAL RESOURCES

         Since inception, we have financed our activities largely through the
sale of equity securities. Prior to the initial public offering, we raised an
aggregate of $104.5 million through various sales of Preferred Stock. In August
1999, we raised net proceeds of approximately $77.3 million from our initial
public offering of Common Stock. We had $64.7 million of cash, cash equivalents
and short-term investments at March 31, 2002.

         Net cash used in operating activities totaled $12.4 million and $12.9
million for the three months ended March 31, 2002 and 2001, respectively,
primarily as a result of our net losses and prepaid distribution costs, offset
in part by non-cash charges for stock-based compensation and depreciation in
both quarters.


                                       11
<PAGE>

         Net cash provided by investing activities totaled $4.6 million for the
three months ended March 31, 2002 and was attributable to the net proceeds from
sales of short-term investments totaling $4.9 million, offset by the acquisition
of $276,000 of property and equipment. Net cash provided in investing activities
totaled $25.1 million for the three months ended March 31, 2001, and was
attributable to the net proceeds from sales of short-term investments totaling
$26.0 million, offset by the purchase of $891,000 of property and equipment.

         Net cash provided by financing activities for the three months ended
March 31, 2002 and 2001 was $118,000 and $421,000, respectively, was due to
proceeds from issuance of Common Stock under our employee stock option and
purchase plans.

         We have entered into agreements with cable and direct broadcast
satellite system operators and other television industry participants, some of
whom are related parties, who support Wink-enhanced programming, to share with
these entities a portion of revenues, if any, we generate from viewer responses
to the Wink Service. These revenue sharing commitments are based upon the level
of the commitment the particular participant has made to support the Wink
Service. We record the revenue sharing as a charge to revenue sharing and launch
fees expense in the period the revenue is recognized. To date, revenue sharing
expense has been insignificant.

         For certain cable and direct broadcast satellite system operators and
cable programmers, including related parties, we have also provided minimum
revenue guarantees. If the Wink Service fails to generate sufficient revenue to
meet the revenue guarantees, we are obligated to pay the difference between the
guaranteed amount and the amount actually earned. Such revenue guarantees will
be recognized in the period incurred. We have also agreed to provide marketing
and launch funds to a number of cable and direct broadcast satellite system
operators, contingent upon the commercial launch of the Wink Service or the
number of households deployed, including in some cases a per household fee, of
up to $5.00.

         In February and March 2002, we amended agreements with three related
party distribution partners. Based on the terms of the amendments, we have
decreased our obligations related to revenue guarantees and system and launch
fees. Based on management's estimates of the future obligations that were set
forth in the agreements before the amendments, we expect these amendments to
save us approximately $22.0 million in cash payments in 2002 and 2003.

         We believe that our existing cash, cash equivalents and short-term
investments will be sufficient to meet our currently anticipated business
requirements, including capital expenditures and strategic operating programs,
for at least the next 12 months. Thereafter, if necessary, we may need to sell
additional equity or debt securities or obtain additional credit facilities. The
sale of additional equity or convertible debt securities may result in
additional dilution to our stockholders. We may not be able to raise any such
capital on terms acceptable to us, or at all.

RECENT ACCOUNTING PRONOUNCEMENTS

         In April 2001, the Financial Accounting Standards Board's ("FASB")
Emerging Issues Task Force ("EITF") reached consensus on issue No. 00-25,
"Vendor Income Statement Characterization of Consideration Paid to a Reseller of
the Vendor's Products" ("EITF 00-25"). In November 2001, the EITF reached
consensus on Issue No. 01-9, "Accounting for Consideration Given by a Vendor to
a Customer or a Reseller of the Vendor's Products" ("EITF 01-9"). EITF 00-25 and
EITF 01-9 require that consideration, including equity instruments, given to a
customer should be classified in the vendor's income statement as a reduction of
revenue unless the consideration relates to a separable identifiable benefit
received from the customer and the fair value of such benefit can be reasonably
estimated. The Company typically gives to its distributors various incentives
including revenue guarantees, launch funds and warrants. The Company adopted
EITF 00-25 and EITF 01-9 in the first quarter of fiscal year 2002. In accordance
with the transition guidance, financial statements for prior periods presented
for comparative purposes were reclassified to comply with the new income
statement presentation requirement which resulted in a reclassification from
revenue to revenue sharing and launch fees expense of approximately $1,193,000
for the quarter ended March 31, 2001. The adoption of EITF 00-25 and EITF 01-9
had no impact on the Company's operating loss, net loss or net loss per share.

         In October 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets". SFAS 144 supercedes SFAS 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed Of" and amends Accounting Principles Board Opinion No. 30,
"Reporting Results of Operations Reporting the Effects of Disposal of a Segment
of a Business". The Company adopted SFAS 144 in the quarter ended March 31,
2002. The adoption of SFAS 144 did not have a significant impact on its
financial statements.

                                       12
<PAGE>

                                  RISK FACTORS

         THE RISKS AND UNCERTAINTIES DESCRIBED BELOW ARE NOT THE ONLY RISKS WE
FACE. ADDITIONAL RISKS AND UNCERTAINTIES NOT CURRENTLY KNOWN TO US OR THAT WE
CURRENTLY BELIEVE ARE IMMATERIAL COULD ALSO IMPAIR OUR BUSINESS OPERATIONS.

WE EXPECT TO INCUR SUBSTANTIAL OPERATING AND NET LOSSES.

         We have a limited operating history, which makes the prediction of
future results difficult. We have incurred significant net losses since
inception and, at March 31, 2002, had an accumulated deficit of $205.1 million.
To date, we have recognized minimal revenue, and our ability to generate revenue
is subject to substantial uncertainty. In addition, we currently intend to incur
substantial operating expenses to fund additional technological development,
sales, marketing, estimated transaction processing and general activities. Also,
we have entered into agreements with four cable and direct broadcast satellite
system operators and three cable programmers in which we provide minimum revenue
guarantees, which we estimate to range from $7.5 million to $8.5 million in
2002. We expect that our total operating expenses, excluding stock compensation
charges, for the year ending December 31, 2002 will be $40 to $45 million.

OUR LIMITED OPERATING HISTORY AND THE EMERGING MARKET FOR INTERACTIVE TELEVISION
MAKE OUR FUTURE FINANCIAL RESULTS UNPREDICTABLE.

         Since our inception, we have not had a profitable quarter and may never
achieve or sustain profitability. Although our revenues increased for each of
the last three years, we may not be able to sustain our historical revenue
growth rates. We also expect to continue to incur significant revenue sharing
and launch fees and product development expenses and increasing sales and
marketing expenses. In addition, a significant amount of our revenues have been
derived from installation and non-recurring engineering consulting services
provided by us and not from transaction fees paid by advertisers, merchants and
network and cable programmers in conjunction with Wink-enhanced advertising and
in-show commerce opportunities. If we are to achieve profitability given our
planned expenditure levels, we will need to generate and sustain substantially
increased transaction fees, data service fees and license and royalty revenues;
however, our future revenue prospects, particularly those derived from viewer
response activities, are subject to a high degree of uncertainty. As a result,
we expect to incur significant and increasing losses and negative cash flows for
the foreseeable future.

OUR BUSINESS IS DEPENDENT UPON CONTENT PROVIDERS, DISTRIBUTORS, ADVERTISERS AND
CONSUMERS EMBRACING THE WINK TECHNOLOGY.

         Since our business plan is premised upon the expectation that we will
eventually receive the primary portion of our revenue directly from advertisers
and merchants, our business will suffer if advertisers and merchants do not
create and use Wink-enhanced advertising. Additionally, if the Wink Service is
not broadly accepted and promoted by cable and direct broadcast satellite system
operators, our business plan will not succeed. These operators may choose not to
implement the Wink Service for a variety of reasons. Our success will depend
heavily upon broad acceptance of the Wink Service by television viewers. If
significant numbers of viewers do not request information or purchase goods and
services in response to Wink-enhanced programming and advertising, advertisers
and merchants are likely to terminate their use of Wink-enhanced advertising or
never adopt the Wink Service. Viewers may not react favorably to Wink Service
for various reasons. For example, they may feel it is too complex or they may be
concerned about security or privacy issues.

         We do not currently have substantial commitments for advertising. If we
are unable to successfully negotiate favorable agreements with our advertisers,
our business will suffer.

WE WILL INCUR SUBSTANTIAL LIABILITY IF WINK ENHANCED BROADCASTING FAILS TO
GENERATE SUFFICIENT REVENUE TO MEET OUR REVENUE GUARANTEES AND OTHER
OBLIGATIONS.


                                       13
<PAGE>

         We have entered into agreements with Microsoft, cable and direct
broadcast satellite system operators and other market participants to share with
these entities a portion of revenues, if any, we generate from viewer responses
to the Wink Service. For four cable and direct broadcast satellite system
operators, we have provided a minimum revenue guarantee. These guarantees range
from $1 to $3.50 per year per Wink-enabled home. In addition, we have given
minimum revenue guarantees to Microsoft ranging from $2 to $4 per year per
Wink-enabled device in which Microsoft controls the operating system,
application environment and content and data services, in exchange for certain
rights to process viewer responses to enhanced television offers. If the Wink
Service fails to generate sufficient revenue to meet these minimum revenue
guarantees, we will have to pay the difference between the guaranteed amount and
the amount actually earned by the operator or Microsoft. We expect the aggregate
amount that we will pay under these revenue guarantee arrangements to be between
$7.5 million to $8.5 million in 2002.

         We have also agreed to provide launch and marketing funds to a number
of cable and direct broadcast satellite system operators and other market
participants, contingent upon the commercial launch of the Wink Service, of up
to $5.00 per household. We expect the aggregate amount that we will pay for
launch and marketing funds to be between $8 million to $8.5 million in 2002.

IF BROADCAST AND CABLE NETWORKS DO NOT AIR WINK-ENHANCED ADVERTISEMENTS, WE WILL
NOT GENERATE REVENUES FROM ADVERTISERS AND MERCHANTS.

         Because Wink enhancements are only available to viewers of networks
that have adopted the Wink Service, we must rely upon networks to air
Wink-enhanced advertising and programming in order to execute our business plan.
While we have entered into agreements with 27 cable networks and four broadcast
networks, these agreements generally commit the networks to use only reasonable
efforts to air a specified amount of Wink-enhanced programming and do not
require a Wink programming enhancement to be available at all times during this
programming. In addition, three of the cable and broadcast networks' agreements
to air Wink-enhanced programming have expired, although most continue to air
such programming. Moreover, our agreements allow the networks to select the
programming to be enhanced at their discretion, and do not require the networks
to employ enhanced broadcasting for all types of programming. Our agreements
with networks are short-term and generally can be terminated after one year.
Some networks can also terminate their agreements with us early upon the
occurrence of certain events, including our failure to achieve specific
performance requirements. The termination of one or more of these agreements, or
our failure to enter into additional agreements and to increase programming
commitments substantially, may prevent us from generating sufficient revenues to
conduct our business.

OUR ABILITY TO GENERATE REVENUES WILL SUFFER IF CREATORS OF PROGRAMMING OR
ADVERTISING DO NOT CREATE HIGH-QUALITY CONTENT.

         In order for Wink to motivate viewers to interact with Wink-enhanced
programming and advertising, creators of programming and advertising must
develop and integrate high-quality Wink-enhanced content. If they fail to do so,
viewers may not respond to Wink-enhanced programming, which would impair our
ability to generate revenue.

WE HAVE RELIED UPON A LIMITED NUMBER OF CUSTOMERS FOR A SIGNIFICANT PORTION OF
OUR REVENUES.

         We currently derive a significant portion of our revenues from a
limited number of customers. In the three months ended March 31, 2002, our three
largest customers accounted for 51% of our revenues, and one customer, a related
party, accounted for 40% by itself. In the quarter ended March 31, 2001, our
three largest customers, accounted for approximately 33% of our revenues. We do
not expect that we will continue to be dependent upon a limited number of
customers for a significant portion of our revenues in future periods since our
business plan is premised upon receiving the primary portion of our revenue
directly from several advertisers and merchants. As a result, if we fail to
successfully execute our business plan, as it currently exists, sell our
products and services to one or more customers in any particular period, or if a
large customer purchases fewer of our products or services or terminates its
relationship with us, our revenues could decline significantly.


                                       14
<PAGE>

WE HAVE DEPENDED ON ARRANGEMENTS WITH RELATED PARTIES.

         Revenues related to software licenses, engineering and installation
services provided to customers who are also holders of our Common Stock
represented $36,000 or 3% of our total revenues for the three months ended
March 31, 2002. Additionally, revenue sharing and launch fees to related parties
were $2.8 million and $6.4 million or 30% and 41% of total costs for the three
months ended March 31, 2002 and 2001, respectively.

         Although we have negotiated each of our distribution agreements with
these stockholders at "arms length", it is possible that future agreements or
negotiations with these parties, if any, could be affected by the fact that they
own shares of our Common Stock or have been granted warrants to purchase shares
of our Common Stock. For example, specific terms of our agreements, such as
pricing, may be higher or lower than the prices that may be charged by, or to,
unrelated parties for similar services. Moreover, if our relationships with
these related parties were to change adversely, we could experience a decline in
revenues, which could have a material adverse affect on the price of our Common
Stock.

WE MAY INCUR NET LOSSES OR INCREASED NET LOSSES WHEN WE ARE REQUIRED TO RECORD A
SIGNIFICANT ACCOUNTING EXPENSE RELATED TO THE ISSUANCE OF COMMON STOCK AND
WARRANTS.

         In March 2002, we renegotiated agreements with two related party
distribution partners whereby we agreed to issue an aggregate of 2.0 million
shares of Common Stock in exchange for the reduction of certain future revenue
sharing and launch fee liabilities. The value of the Common Stock will be
amortized over the estimated economic life of the arrangements with the
distribution partners.

         In 2000 and 2001, we entered into agreements with several distribution
partners whereby we agreed to issue warrants to purchase up to an aggregate of
1.8 million shares of Common Stock which are exercisable if those distribution
partners satisfy certain milestones. The value of the warrants will be estimated
using the Black-Scholes model when it becomes probable that the warrants will be
earned and will be remeasured until performance is complete. The value of the
warrants will be amortized over the estimated economic life of the arrangements
with the distribution partners. Currently, none of the performance milestones
have been met, and therefore, these warrants are not currently exercisable.

         If the warrants become exercisable, we could be required to record
significant non-cash accounting expenses. As a result, we could incur net losses
or increased net losses for a given period, which could seriously harm our
operating results and stock price.

GENERAL ECONOMIC AND POLITICAL CONDITIONS MAY REDUCE OUR REVENUES AND HARM OUR
BUSINESS.

         We are subject to the risks arising from adverse changes in domestic
and global economic and political conditions. Because of the recent economic
slowdown in the United States and the terrorist events of September 11, the
current state of the economy has worsened and companies in many industries are
delaying or reducing technology purchases. We experienced the impact of the
September 11 events in the third quarter and the economic slowdown in the past
few quarters with reductions in television advertising activity and the
postponement of the advertising campaigns from some of our advertisers. The
continued threat of terrorism within the United States, the escalation of
military action and heightened security measures in response to such threats may
cause significant disruption to commerce throughout the world. To the extent
that such disruptions result in continuing decline in spending for advertising
and media placement, or the suspension of national advertising by major
television networks, as occurred during the two weeks following September 11,
our business and results of operations could be materially and adversely
affected. If the current economic conditions in the United States continue or
worsen, or if a wider or global economic slowdown occurs, we may fall short of
our revenue expectations for any given quarter of 2002 or for the entire year.
These conditions would seriously harm our operating results and stock price.


                                       15
<PAGE>

THE EMERGING NATURE OF THE MARKET FOR INTERACTIVE TELEVISION MAY CREATE
SIGNIFICANT FLUCTUATIONS IN OUR QUARTERLY OPERATING RESULTS, WHICH COULD RESULT
IN A DECLINE IN THE TRADING PRICE OF OUR COMMON STOCK.

         Our future quarterly operating results may fluctuate significantly due
to a number of factors related to the emerging market including:

         o        the amount of transaction-processing activity through the Wink
                  Response Network;

         o        the timing and success of infrastructure upgrades necessary to
                  support deployment by industry participants;

         o        the timing of the change, if any, in the basis of our
                  relationships with advertisers and merchants from a fixed flat
                  fee arrangement to a fee-per-transaction or report
                  arrangement; and

         o        the effect of stock-based incentives provided to various
                  industry participants.

         Due to these factors, it is possible that our operating results in one
or more future quarters will fail to meet or exceed the expectations of
securities analysts or investors. In such event, the trading price of our Common
Stock would likely decline.

THE FAILURE OF THE WINK RESPONSE NETWORK TO PERFORM EFFECTIVELY AND RELIABLY
WILL AFFECT OUR ABILITY TO EARN TRANSACTION FEE REVENUES.

         An essential part of our strategy is the generation of high volumes of
commercial transaction traffic through the Wink Response Network, in conjunction
with related information systems at broadcast and cable networks, cable and
direct broadcast satellite system operators, advertisers and merchants.
Consequently, the inability by us or our strategic partners, to operate and
maintain the required transaction-processing systems and associated
infrastructure for the Wink Response Network or the subsequent occurrence of
significant system interruptions or errors, would affect our ability to:

         o        consistently execute viewer response transactions;

         o        maintain satisfactory levels of customer service; and

         o        attract and retain strategic relationships in the television
                  industry.

         Upon the launch of DIRECTV in October 2000, we have begun capturing and
routing large numbers of transaction responses through the Wink Response Network
but we may not be able to accurately predict and prepare for significant
increases in response transactions, if any, or to effectively implement any
necessary system changes, expansion and upgrades in a timely manner. We may also
be required to change or upgrade the Wink Response Network in order to respond
to changes in the information systems used by advertisers, merchants, networks
or cable or direct broadcast satellite system operators.

WE FACE COMPETITION FROM A NUMBER OF COMPANIES.

         Current and potential competitors in one or more aspects of our
business include television and other system software companies, interactive
television system providers and multimedia authoring tool providers. We also
face competition from other providers and companies operating in the direct
marketing business, especially operators of toll-free response call centers.
Many of these companies may have significantly greater financial, technical,
manufacturing and marketing resources than us and may be in a better position to
compete in the industry.

         A number of companies are developing system software for the general
interactive television market, including Liberate Technologies, OpenTV and Canal
Plus. OpenTV and Canal Plus already offer certain products with features similar
to the Wink Service. Many of these competitors have the support of, or
relationships with, industry participants


                                       16
<PAGE>
with which we also have relationships, which could adversely affect the extent
of support these market participants give to the Wink Service. In addition,
there also are a number of interactive system providers that have developed
proprietary software and hardware for adding interactivity to existing
television technologies, including Worldgate Communications, AOL TV, ACTV and
MetaTV. In addition, one or more of these entities or smaller companies might
choose to pursue hardware-independent, cross-platform opportunities directly
competitive with the Wink Service. If we are not able to compete successfully
against current or future competitors, our business, operating results and
financial condition will be materially adversely effected.

WE NEED TO ADAPT TO TECHNOLOGICAL CHANGE IN A MARKET THAT MAY NEVER FULLY
DEVELOP OR MAY DEVELOP WITH STANDARDS THAT ARE NOT COMPATIBLE WITH OUR
TECHNOLOGY.

         The emerging and unsettled market for interactive television will
require that we continually improve the performance, features and reliability of
the Wink Service, particularly in response to competitive offerings. We may not
be successful in responding quickly, cost-effectively and adequately to these
developments. The introduction of new technologies or standards for enhanced
broadcasting could render the Wink Service obsolete or unmarketable. In
addition, the widespread adoption of new television technologies or standards,
cable-based or otherwise, could require us to make substantial expenditures to
modify or adapt our technology, products, services, network or business model.

GOVERNMENT REGULATIONS MAY ADVERSELY AFFECT OUR ABILITY TO BROADLY TRANSMIT WINK
ENHANCED BROADCASTING AND CAPTURE MARKETING DATA

         Governmental regulation of the telecommunications, media, broadcast and
cable television industries may adversely affect the ability of Wink and other
market participants to transmit the Wink Service. In addition, future
legislation or regulatory requirements regarding privacy issues could be enacted
to require notification to users that captured data may be used by marketing
entities to target product promotion and advertising to that user.

INTELLECTUAL PROPERTY INFRINGEMENT CLAIMS MAY BE ASSERTED AGAINST US, WHICH
COULD DISRUPT OUR BUSINESS.

         If third parties assert claims of infringement of their proprietary
rights against us, we will incur significant costs and a diversion of resources
with respect to the defense of these claims. For example, we recently settled a
suit filed against us by Fort Myers Broadcasting Company. If any claims or
actions are asserted against us, we may seek to obtain a license under a third
party's intellectual property rights. However, a license under such
circumstances may not be available on reasonable terms, if at all.

         Also, many of the agreements with our customers contain an
indemnification obligation, which could be triggered in the event that a
customer is named in an infringement suit involving any of our products that are
incorporated in our customer's products or service. For example, on December 4,
2000, a suit was filed in the United States District Court for the District of
Delaware by Pegasus Development Corporation and Personalized Media
Communications, LLC ("PMC") alleging that DirecTV, Inc., Hughes Electronics
Corporation, Thomson Consumer Electronics, Philips Electronics North America,
Inc., are willfully infringing certain claims of seven United States Patents
owned by PMC. Though we are not a defendant in the suit, PMC is currently
alleging certain of our products, in combination with the defendants' products
infringe PMC's patents. If it is determined that our products infringe any of
the asserted claims, our business and financial performance may be adversely
affected. If it is determined that we are obligated to indemnify any of the
defendants in this matter, our business and financial performance may be
adversely affected.

THE LOSS OF ANY OF OUR KEY PERSONNEL WOULD HARM OUR COMPETITIVENESS.

         We believe that our success will depend on the continued employment of
our senior management team and key technical personnel. If certain members of
our senior management team or key technical personnel were unable or unwilling
to continue in their present positions, these individuals would be very
difficult to replace and our ability to


                                       17
<PAGE>

manage day to day operations, develop and deliver new technologies, attract and
retain customers, attract and retain other employees and generate revenues,
could be seriously harmed.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         Interest Rate Sensitivity. Our exposure to market risk for interest
rate changes relates primarily to our short-term investment portfolio. We had no
derivative financial instruments as of March 31, 2002 or December 31, 2001. We
invest our marketable securities in accordance with our investment policy and
maintain our portfolio in the form of managed investment accounts comprised of
money market accounts, corporate bonds and government bonds and notes. We
consider all highly liquid investments with an original maturity of three months
or less when purchased to be cash equivalents. The primary objective of our
portfolio is to maintain proper liquidity to meet the operating needs of the
business. Our policy specifies credit quality standards for the investments and
limits the amount of credit exposure to any single issue, issuer or type of
investment. The weighted average maximum maturity of the portfolio is based on
the Lehman 1-3 index.

         The fair value of our investments are subject to interest rate risk and
will fall in value in the event market interest rates increase. If market
interest rates were to increase immediately and uniformly by 100 basis points
from levels as of March 31, 2002, we believe the fair value of the portfolio
would decline by an immaterial amount. If interest rates were to fall by 100
basis points, our interest income would fluctuate by an immaterial amount.

         Foreign Currency Exchange Risk. The principal portion of business is in
the United States. Additionally, contracts we have entered into with companies
headquartered in foreign countries have primarily been denominated in U.S.
dollars. We may be subject to exposure in the future from our Canadian
distribution partners because certain Canadian contracts are denominated in
Canadian dollars. To date, we have not received significant revenues or incurred
significant expenses with our Canadian distribution partners.


                                       18
<PAGE>

                                     PART II
                                OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

         On September 15, 1999, Fort Myers Broadcasting Company filed suit
against us in the United States District Court for the Middle District of
Florida, alleging federal trademark infringement, unfair competition and
dilution as well as injury to business reputation, unfair competition and
dilution in the State of Florida. In the fourth quarter of 2001, the parties
entered into a settlement agreement and on December 14, 2001, this case was
dismissed. On approximately January 14, 2002 the case was automatically
dismissed with prejudice.

         On December 4, 2000, a suit was filed in the United States District
Court for the District of Delaware by Pegasus Development Corporation and
Personalized Media Communications, LLC ("PMC") alleging that DIRECTV, Inc.,
Hughes Electronics Corporation, Thomson Consumer Electronics and Philips
Electronics North America, Inc., are willfully infringing certain claims of
seven U.S. Patents assigned to or licensed by PMC. Though we are not a
defendant in the suit, PMC may allege certain of our products, in combination
with the products provided by the defendants, infringe PMC's patents. Our
agreements with each of the defendants include indemnification obligations that
may be triggered by the litigation. If it is determined that we are obligated to
defend any defendant in this matter, our business and financial performance may
be adversely affected. If it is determined that our products infringe any of the
asserted claims, our business and financial performance may be adversely
affected.

         We believe we have meritorious defenses and plan to vigorously defend
ourselves in the matters filed against us, and while the results of such
litigation and claims cannot be predicted with certainty, we believe that the
resolution of each matter will not have a material adverse effect on our
financial position, results of operations or on our cash flows.

ITEM 2. CHANGES IN SECURITIES

         On March 7, 2002 and March 11, 2002, we agreed to issue an aggregate
of two million shares of our Common Stock to two related party distribution
partners in exchange for an amendment to our agreements with such parties,
which reduced our obligations related to revenue guarantees and system and
launch fees. The transactions were exempt from registration under the
Securities Act of 1933, as amended, under Section 4(2) thereof.

         On August 18, 1999, we commenced an initial public offering ("IPO") of
5,462,500 shares of common stock (including 200,000 shares sold by existing
stockholders and an underwriters' over-allotment option of 712,500 shares) at
$16.00 per share pursuant to a registration statement (No. 333-80221) (the
"Initial Registration Statement") and a related registration statement
(333-85531) filed pursuant to Rule 462(b) of the Securities Act. The Initial
Registration Statement was declared effective by the Securities and Exchange
Commission. The offering was completed on August 24, 1999, and all shares have
been sold. The aggregate gross proceeds from the offering were $84.2 million for
the shares sold by us and $3.2 million for the shares sold by the selling
stockholders.

         We have used, and continue to expect to use, the proceeds from the
offering for general corporate purposes, including working capital. A portion of
the proceeds may also be used for the acquisition of businesses that are
complementary to ours. Pending such uses, we have invested the net proceeds of
the IPO in interest-bearing securities that management considers to be credit
worthy.

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

         None.


                                       19
<PAGE>

                                    SIGNATURE

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

                                       WINK COMMUNICATIONS, INC.
                                       (Registrant)

                                       By: /s/ TIMOTHY TRAVAILLE
                                           -------------------------------------
                                           Executive Vice President
                                           (Duly Authorized Officer and
                                           Principal Financial and Accounting
                                           Officer)

Date: May 10, 2002


                                       20