U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                   FORM 10-QSB



(Mark One)

XXX  QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
     OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2002.

___  TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
     OF 1934 FOR THE TRANSITION PERIOD FROM_____TO_____.



                         Commission File Number 0-27106


                                  VISEON, Inc.
                                  ------------
        (Exact name of small business issuer as specified in its charter)


              Nevada                                         41-1767211
              ------                                         ----------
   (State or other jurisdiction                             (IRS Employer
of incorporation or organization)                        Identification No.)


  8700 North Stemmons Frwy #310 Dallas, Texas                   75247
  --------------------------------------------                  -----
    (Address of principal executive offices)                 (Zip Code)

                                 (214) 424-5700
                                 --------------
                           (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 report), and (2) has been
subject to such filing requirements for the past 90 days. YES _X_ NO ___

The Company had 14,172,066 shares of Common Stock, $ 0.01 par value per share,
outstanding as of May 12, 2002.

Transitional Small Business Disclosure Format (Check one): Yes ___ No _X_


                                       1
<PAGE>


                           Viseon, Inc. and Subsidiary

                                      INDEX


                                                                            Page
                                                                            ----


PART I.  FINANCIAL INFORMATION

      Item 1.    Financial Statements

                 Balance Sheets - March 31, 2002 (unaudited)
                 And June 30, 2001.............................................3

                 Statements of Operations (unaudited) - Three and nine
                 Months ended March 31, 2002 and 2001..........................4

                 Statements of Cash Flows (unaudited) - Nine
                 Months ended March 31, 2002 and 2001..........................5

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

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


PART II.  OTHER INFORMATION...................................................24

Signatures....................................................................25

Exhibit Index.................................................................26


                                       2
<PAGE>


                           VISEON, INC. AND SUBSIDIARY

                           Consolidated Balance Sheets

                        March 31, 2002 and June 30, 2001

<TABLE>
<CAPTION>
                                                                         March 31,
                                                                           2002             June 30,
                                  Assets                                (Unaudited)           2001
------------------------------------------------------------------------------------------------------
<S>                                                                     <C>               <C>
Current assets:
    Cash and cash equivalents                                           $      9,202      $     81,115
    Accounts receivable, net of allowance for doubtful
      accounts of $128,000 and $144,000, respectively                      1,461,567           529,464
    Other Receivable                                                              --           299,633
    Inventories, net of obsolescence reserve of $283,000
      and $283,000                                                         1,617,830           546,390
    Prepaid expenses                                                         129,814            31,564
------------------------------------------------------------------------------------------------------
            Total current assets                                           3,218,413         1,488,166
------------------------------------------------------------------------------------------------------

Property and equipment:
    Furniture and equipment                                                2,305,760         2,251,970
    Leasehold improvements                                                     5,421             5,421
      Less accumulated depreciation and amortization                      (1,669,520)       (1,453,851)
------------------------------------------------------------------------------------------------------
            Net property and equipment                                       641,661           803,540
------------------------------------------------------------------------------------------------------

Other assets, net                                                            121,517           124,036
------------------------------------------------------------------------------------------------------

                                     Total assets                       $  3,981,591      $  2,415,742
======================================================================================================

                        Liabilities and Stockholders' Equity
------------------------------------------------------------------------------------------------------

Current liabilities:
    Revolving credit facility, net of original issuance discount        $  1,239,841      $    534,860
    Current portion of capital lease obligations                              12,426            62,953
    Accounts Payable                                                       1,808,110         1,067,760
    Accrued Expenses                                                         127,021           229,005
    Deferred Revenue                                                         155,827            91,339
------------------------------------------------------------------------------------------------------
            Total current liabilities                                      3,343,225         1,985,917
------------------------------------------------------------------------------------------------------

Long-term liabilities:
    Capital lease obligations, net of current portion                             --            23,085
    Deferred Revenue, net of current portion                                 120,728           267,245
------------------------------------------------------------------------------------------------------
            Total long-term liabilities                                      120,728           290,330
------------------------------------------------------------------------------------------------------

Stockholders' equity:
      Preferred stock ($.01 par value per share, 5,000,000 shares                 --                --
            authorized, no shares issued and outstanding)
      Common stock ($.01 par value per share, 50,000,000 shares
            authorized, 14,172,066 and 11,668,981 issued and
            outstanding respectively                                         141,721           116,689
      Additional paid-in capital                                          21,139,638        20,168,669
      Accumulated deficit                                                (20,763,721)      (20,145,863)
------------------------------------------------------------------------------------------------------
            Total stockholders' equity                                       517,638           139,495
------------------------------------------------------------------------------------------------------

                     Total liabilities and stockholders' equity         $  3,981,591      $  2,415,742
======================================================================================================
</TABLE>

See accompanying notes to financial statements.


                                       3
<PAGE>


                           VISEON, INC. AND SUBSIDIARY

                      Consolidated Statements of Operations

           Three Months and Nine Months Ended March 31, 2002 and 2001

<TABLE>
<CAPTION>
                                                           Three Months      Three Months
                                                               Ended            Ended
                                                             March 31,        March 31,
                                                               2002              2001
                                                            (Unaudited)       (Unaudited)
------------------------------------------------------------------------------------------
<S>                                                        <C>               <C>
Net sales                                                  $  1,758,774      $    713,074
Cost of goods sold                                            1,405,812           366,498
-----------------------------------------------------------------------------------------
         Gross profit                                           352,962           346,576

Research and development                                         47,339           129,680
Selling, general, and administrative                            210,244           518,211
-----------------------------------------------------------------------------------------
         Operating income (loss)                                 95,379          (301,315)

Other income (expense):
   Other income (expense), net                                   10,642             3,458
   Interest expense                                             (31,656)          (50,269)
-----------------------------------------------------------------------------------------
         Other income (expense), net                            (21,014)          (46,811)
-----------------------------------------------------------------------------------------

         Income (loss) before income taxes                       74,365          (348,126)

         Provision for income tax                                    --                --

         Net income (loss)                                 $     74,365      $   (348,126)
=========================================================================================

         Net income (loss) per common share - basic        $       0.01      $      (0.04)
         Net income (loss) per common share - diluted      $       0.00      $      (0.04)
=========================================================================================

         Weighted average shares outstanding - basic         13,690,320         9,605,294
         Weighted average shares outstanding - diluted       16,057,644         9,605,294
=========================================================================================

<CAPTION>
                                                           Nine Months        Nine Months
                                                              Ended              Ended
                                                            March 31,          March 31,
                                                              2002               2001
                                                           (Unaudited)        (Unaudited)
------------------------------------------------------------------------------------------
<S>                                                        <C>               <C>
Net sales                                                  $  6,018,866      $  2,708,751
Cost of goods sold                                            4,370,154         1,360,429
-----------------------------------------------------------------------------------------
         Gross profit                                         1,648,712         1,348,322

Research and development                                        220,849           420,575
Selling, general, and administrative                          2,032,287         1,583,503
-----------------------------------------------------------------------------------------
         Operating loss                                        (604,424)         (655,756)

Other income (expense):
   Other income (expense), net                                  113,265             7,651
   Interest expense                                            (126,699)         (170,985)
-----------------------------------------------------------------------------------------
         Other income (expense), net                            (13,434)         (163,334)
-----------------------------------------------------------------------------------------

         Net loss                                          $   (617,858)     $   (819,090)
=========================================================================================

         Net loss per common share - basic                 $      (0.05)     $      (0.09)
         Net loss per common share - diluted               $      (0.05)     $      (0.09)
=========================================================================================

         Weighted average shares outstanding - basic         12,364,386         9,014,069
         Weighted average shares outstanding - diluted       12,364,386         9,014,069
=========================================================================================
</TABLE>

See accompanying notes to financial statements.


                                       4
<PAGE>


                           VISEON, INC. AND SUBSIDIARY

                      Consolidated Statements of Cash Flows

                    Nine Months Ended March 31, 2002 and 2001

<TABLE>
<CAPTION>
                                                                           Nine Months       Nine Months
                                                                              Ended             Ended
                                                                            March 31,         March 31,
                                                                              2002              2001
                                                                           (Unaudited)       (Unaudited)
---------------------------------------------------------------------------------------------------------
<S>                                                                       <C>               <C>
Cash flows from operating activities:
    Net loss                                                              $   (617,858)     $   (819,090)
    Adjustments to reconcile net loss to net cash provided by
      (used in) operating activities:
        Depreciation and amortization                                          245,045           239,099
        Compensation related to stock options                                  (38,318)           45,920
        Compensation related to issuance of common stock                        86,400                --
        Warrants issued for services                                            39,075                --
        Amortization of original issuance discount, line of credit              13,281                --
        Changes in operating assets and liabilities:
           Accounts receivable, net                                           (932,103)          375,804
           Inventories, net                                                 (1,071,440)          228,950
           Prepaid expenses                                                    (98,250)            8,995
           Accounts payable                                                    740,350           (18,292)
           Accrued expenses                                                   (101,984)          (28,269)
           Deferred revenue                                                    217,604            (5,127)
--------------------------------------------------------------------------------------------------------
             Net cash provided by (used in) operating activities            (1,518,198)           27,990
--------------------------------------------------------------------------------------------------------

Cash flows from investing activities:
    Purchases of software, property and equipment                              (53,790)         (113,118)
    Payments for patent cost                                                   (26,858)          (80,969)
--------------------------------------------------------------------------------------------------------
             Net cash (used in) investing activities                           (80,648)         (194,087)
--------------------------------------------------------------------------------------------------------

Cash flows from financing activities:
    Proceeds from issuance of common stock                                     855,725           427,369
    Net borrowing, (repayments) on revolving credit facility                   744,820            (2,722)
    Proceeds from note payable-stockholder                                     800,000           425,000
    Repayment of note payable-stockholder                                     (800,000)         (200,000)
    Payments of capital lease obligations                                      (73,612)         (100,181)
--------------------------------------------------------------------------------------------------------
             Net cash provided by financing activities                       1,526,933           549,466
--------------------------------------------------------------------------------------------------------

             Net change in cash and cash equivalents                           (71,913)          383,369

Cash and cash equivalents at beginning of period                          $     81,115      $     83,930
--------------------------------------------------------------------------------------------------------

Cash and cash equivalents at end of period                                $      9,202      $    467,299
========================================================================================================

Supplemental disclosure of cash flow information:
    Cash paid during period for interest                                  $    118,289      $    147,909
    Cash paid during period for income taxes                              $         --      $         --

Supplemental schedule of non-cash investing and financing activities:
    Note payable and accrued interest converted to common stock           $         --      $    236,034
</TABLE>

See accompanying notes to financial statements


                                       5
<PAGE>


                           VISEON, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             March 31, 2002 and 2001


1. DESCRIPTION OF THE BUSINESS:

Founded in 1993, Viseon, Inc. (the Company) changed its name from RSI Systems,
Inc. to Viseon, Inc. on May 23, 2001. The Company designs, manufactures and
resells business level videoconferencing systems, services and accessories for
domestic and international markets. These systems are available in a variety of
configurations and price points through both direct and indirect sales channels.
During fiscal year 2002, the Company has undergone significant change, from
being a sole provider of its own videoconferencing systems, to a company which
also distributes products and services provided by others.

2. BASIS OF PRESENTATION:

The unaudited interim consolidated financial statements have been prepared in
accordance with accounting principles generally accepted in the United States of
America, pursuant to the rules and regulations of the Securities and Exchange
Commission. Accordingly, certain information and footnote disclosures normally
included in the consolidated financial statements have been omitted or condensed
pursuant to such rules and regulations. The accompanying unaudited consolidated
financial statements should be read in conjunction with the Company's June 30,
2001 financial statements and related notes included in the Company's Annual
Report on Form 10-KSB.

The financial statements include the accounts of RSI Systems Ltd. a subsidiary
in the United Kingdom which is wholly owned by Viseon, Inc.

The financial statements reflect all adjustments, of a normally recurring
nature, necessary to fairly present the results of operations and financial
position of the Company for the interim periods.

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

CAPITALIZED SOFTWARE COSTS. Software costs have been accounted for in accordance
with Statement of Financial Accounting Standards (SFAS) No. 86 "Accounting for
the Costs of Computer Software to be Sold, Leased, or Otherwise Marketed". Costs
associated with the planning and design phase of software development, including
coding and testing activities necessary to establish technological feasibility,
are classified as research and development and expensed as incurred. Once
technological feasibility has been determined, additional costs incurred in
development, including coding, testing and product quality assurance are
capitalized, when material. At March 31, 2002 and June 30, 2001, the Company had
$523,518 and $625,009 of unamortized computer software costs, including software
acquired.

INTANGIBLE ASSETS. The Company amortizes patents over their estimated useful
lives of ten years using the straight-line method. Covenants not to compete are
being amortized using the straight-line method over the term of the covenants.
Accumulated amortization of intangible assets was $37,904 and $9,154 at March
31, 2002 and June 30, 2001.


                                       6
<PAGE>


REVENUE RECOGNITION. The Company records sales revenue at the time products are
shipped. The Company ensures the transaction complies with the seven conditions
and the six considerations contained in Accounting and Auditing Enforcement
Release No. 108 of the Securities and Exchange Commission (SEC).

In November 1999, the SEC issued Staff Accounting Bulletin (SAB) No. 101,
"Revenue Recognition." SAB No. 101, as amended, sets forth the SEC staff's
position regarding the point at which it is appropriate for a registrant to
recognize revenue. The staff believes that revenue is realizable and earned when
all of the following criteria are met: persuasive evidence of an arrangement
exists, delivery has occurred or service has been rendered, the seller's price
to the buyer is fixed or determinable and collectability is reasonably assured.
The Company uses the above criteria to determine whether revenue can be
recognized, and therefore, believes that the issuance of this bulletin does not
have a material impact on these financial statements. The Company adopted SAB
No. 101 during the year ended June 30, 2001 and the effect of adopting was not
material to the financial statements.

ACCOUNTS RECEIVABLE RESERVES. The Company maintains allowances for doubtful
accounts for estimated losses resulting from the inability of its customers to
make required payments. If the financial condition of the Company's customers
declined, resulting in an impairment of their ability to make payments,
additional allowances may be required.

INVENTORY VALUATION. The Company writes down excess and obsolete inventory equal
to the difference between the cost of inventory and the estimated market value
based upon assumptions about product life-cycles, demand for the Company's
products, market conditions and other pertinent factors. If actual product
life-cycles, product demand and market conditions are less favorable than those
projected by management, additional inventory write-downs may be required in
future periods.

4. REVOLVING CREDIT FACILITY:

In December 2001, the Company signed a new commercial loan agreement with a bank
for a $2,500,000 line of credit facility that matures in December 2002. In
connection with the credit facility, the Company issued 200,000 warrants to
purchase common stock at $1.58 per share. The new facility is secured by all
corporate assets and provides working capital based on a borrowing base
comprised of accounts receivable and inventories. The new facility also contains
certain covenants and conditions, including minimum net worth plus subordinated
debt levels. Interest on outstanding borrowings accrues at the prime rate plus
2.25% (7.0% at March 31, 2002). Outstanding borrowings were $1,239,841 at March
31, 2002 net of an original issuance discount of $39,839. The fair market value
of the warrant is being amortized over the life of the credit facility using the
straight-line method.

The Company's previous line of credit was secured by all corporate assets and
provided working capital based on a borrowing base comprised of accounts
receivable, inventories and marketable securities. Interest on outstanding
borrowings accrued at the prime rate plus 4% (7.0% at June 30, 2001).
Outstanding borrowings on the line of credit were $534,860 at June 30, 2001. On
October 30, 2001 the Company paid all outstanding principal and interest due to
the previous bank.

5. RELATED PARTY TRANSACTIONS:

On October 5, 2001, the Company received proceeds of $800,000 from Digital
Investors, LLC in the form of a note due October 5, 2002. The note was secured
by all the Company's assets and was subordinated to its bank line of credit.


                                       7
<PAGE>


Interest was due quarterly at an annual rate of 12%. In January 2002, the
Company repaid the note, together with accrued interest, from the proceeds of
the remaining shares of common stock purchased by Digital under a Stock Purchase
Agreement as amended (see below).

On October 5, 2001, the Company and Digital Investors, LLC (Digital) signed an
amendment to a Stock Purchase Agreement (the "Agreement") originally signed in
February 2001 to; 1) change the required closing date for the remaining shares
to be purchased under the Agreement to "3 days" from the effective date of the
S-2 registration, as opposed to "10 days", 2) issue to Digital, ten-year
warrants to purchase 800,000 shares of the Company's common stock at an exercise
price of $.75 per share upon the final closing of common stock purchased under
the agreement, 3) waive the requirement for a registration of the shares
purchased under the Agreement prior to the final closing of the Agreement if
such registration was not declared effective by October 1, 2002, and 4) require
the Company to file a registration statement covering all shares and warrants
issued to Digital under the amended Agreement within 30 days of the final
closing of the amended Agreement, in the event such registration has not been
completed by the date of such closing. The Company filed a second amendment to
the S-2 registration statement to reflect these changes to the Stock Purchase
Agreement and the registration became effective on January 10, 2002.

On January 18, 2002 the Company issued 2,314,285 shares of common stock
purchased by Digital at $.35 per share under the amended Stock Purchase
Agreement for a total gross price of $810,000.

In February 2002, the Company issued a total of 50,000 shares of its common
stock valued at $0.80 per share to a previous employee in connection with the
terms of a severance agreement.

In October and November 2001, the Company issued a total of 100,000 shares of
its common stock, or 20,000 shares each to W.R. Howell, Charlie Rey, Albert
Hanser, Brian Day, and Gerry Dube, directors of the Company, as compensation, at
values ranging from $0.75 to $1.32 per share, (market value on the date of
issuance). The Company recorded compensation expense of $86,400 in connection
with the stock issuance.

During fiscal year 2002, the Company sold various product totaling approximately
$810,000 to Comlink Technology and OC Management LLC, of Dallas Texas, and also
purchased various products totaling approximately $544,000 from Comlink
Technology for subsequent resale to end users. These companies are owned by a
current shareholder of Viseon, Inc. The transactions between the Viseon, Inc.
and the two companies noted above were executed on terms and conditions
consistent with its standard terms and conditions of sale, on an arms length
basis.

Also, during fiscal year 2002, the Company purchased its MediaPro
videoconferencing products from Altron, Inc. a current stockholder of the
company. The Company believes the transactions between the Viseon, Inc. and
Altron, Inc. were executed on an arms length basis.


                                       8
<PAGE>


6. COMMITMENTS AND CONTINGENCIES:

   a) MANUFACTURING AGREEMENT

         On August 28, 1996, the Company entered into a manufacturing agreement
         with a third party custom manufacturer (Manufacturer). Pursuant to this
         agreement, the Manufacturer agreed to produce the Company's
         videoconferencing products, and warrant that all products will be free
         from defects in material and workmanship for twelve months from the
         date the Company ships to the customer, or fifteen months from the date
         the Manufacturer ships to the Company, whichever comes first.


                                       9
<PAGE>


         The agreement may be terminated by either party upon failure of the
         other party to comply with any material term of the agreement after a
         30-day written notice and cure period. In the event of such
         termination, the Company would be obligated to pay for any goods
         accepted under the terms of the agreement. The Company may also
         terminate the agreement upon 30 days written notice. In such case, the
         Company may be obligated to pay for certain material and work in
         progress for products ordered. As of March 31, 2002, the Company's loss
         contingency for material and work in progress for products ordered
         amounted to; up to approximately $700,000.

         This amount represents the approximate cost to the manufacturer of
         goods purchased on behalf of the Company in support of the
         manufacturing of the Company's MediaPro product line that have not been
         incorporated into finished MediaPro products shipped and billed to the
         Company. This product line has not been the primary focus of the
         Company's sales and marketing activities during fiscal year 2002 since
         the Company's efforts have been directed toward sales of well known
         brand name products owned and manufactured by other companies in the
         marketplace. In addition, the MediaPro product line does not contain
         certain features (primarily the ability to operate over IP networks)
         demanded by many customers in North America, where the Company has
         concentrated its sales efforts. These factors, when viewed in
         conjunction with the level of inventory purchased on behalf of the
         Company by the Manufacturer, create a contingency that could result in
         the Manufacturer claiming the Company is obligated to pay for the
         inventory it has procured to build MediaPro products.

         The Company believes most of the future sales of the MediaPro product
         line will likely be made to international customers, who in the past
         have purchased the MediaPro product despite its inability to operate
         over IP networks. In the third quarter of fiscal year 2002, the Company
         sold MediaPro products totaling approximately $396,000 in revenue. In
         the event the Company cannot sell sufficient levels of MediaPro to
         utilize the inventory procured by the manufacturer within a reasonable
         amount of time, the Company and the manufacturer could enter into
         negotiations regarding ultimate responsibility for the goods. In such a
         case, and in the event an agreement was reached that obligated the
         Company to pay for all or a portion of the inventory, the Company could
         experience additional losses if such inventory costs were not
         subsequently recoverable through MediaPro product sales in the
         marketplace or other means. As of March 31, 2002 the Company has not
         reserved for this contingency in its financial statements as it
         currently believes that financial loss related to the matter is not
         probable.

   b) MARKETING AGREEMENT

         In February 2001, in connection with an agreement with RSIM to market
         the Company's products and services, the Company issued warrants to
         purchase 1,000,000 shares of its common stock at a price of $.45 per
         share. These warrants were valued at $206,300 using the Black-Scholes
         pricing model. In April, 2002, 500,000 of these warrants held by RSIM
         became non-cancelable based on the achievement of required gross sales
         targets as of December 31, 2001. The remaining 500,000 warrants may
         become non-cancelable based on the achievement of gross sales targets
         through December 2002.


                                       10
<PAGE>


c) INVESTOR AND RECRUITMENT AGREEMENT

         In February 2001, in connection with an agreement for seeking potential
         investors and recruiting and hiring senior management, the Company
         issued warrants to purchase 500,000 shares of its common stock at a
         price of $.45 per share. 50,000 warrants were issued and vested
         immediately and were valued at $10,315 using the Black-Scholes pricing
         model. In addition, 450,000 warrants vest at a rate of 37,500 quarterly
         and may vest earlier based on the achievement of earnings criteria as
         defined in the agreement. In connection with the agreement, 37,500
         warrants vested and were valued at $7,736 using the Black-Scholes
         pricing model during the third quarter of fiscal year 2002. The
         warrants expire in February 2006.


                                       11
<PAGE>


CAUTIONARY STATEMENT IDENTIFYING IMPORTANT FACTORS THAT COULD CAUSE THE
COMPANY'S ACTUAL RESULTS TO DIFFER FROM THOSE PROJECTED IN FORWARD LOOKING
STATEMENTS

In connection with the "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995, readers of this document and any document
incorporated by reference herein are advised that this document and documents
incorporated by reference into this document contain both statements of
historical facts and forward looking statements. Forward looking statements are
subject to certain risks and uncertainties, which could cause actual results to
differ materially from those indicated by the forward looking statements.
Examples of forward looking statements include, but are not limited to (i)
projections of revenues, income or loss, earnings or loss per share, capital
expenditures, dividends, capital structure and other financial items, (ii)
statements of the plans and objectives of the Company or its management or Board
of Directors, including the introduction of new products, or estimates or
predictions of actions by customers, suppliers, competitors or regulatory
authorities, (iii) statements of future economic performance, and (iv)
statements of assumptions underlying other statements and statements about the
Company or its business.

This document and any documents incorporated by reference herein also identify
important factors which could cause actual results to differ materially from
those indicated by the forward looking statements. These risks and uncertainties
include price competition, the decisions of customers, the actions of
competitors, the effects of government regulation, possible delays in the
introduction of new products, customer acceptance of products and services, and
other factors which are described herein and/or in documents incorporated by
reference herein. The cautionary statements made pursuant to the Private
Litigation Securities Reform Act of 1995 above and elsewhere by the Company
should not be construed as exhaustive or as any admission regarding the adequacy
of disclosures made by the Company prior to the effective date of such Act.
Forward looking statements are beyond the ability of the Company to control and
in many cases the Company cannot predict what factors would cause results to
differ materially from those indicated by the forward looking statements.



                                       12
<PAGE>


                      MANAGEMENT'S DISCUSSION AND ANALYSIS

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

Viseon, Inc., a Nevada corporation, (formerly RSI Systems, Inc.) is a global
visual communication sales, service and manufacturing organization. Viseon,
Inc., (the "Company" or "Viseon"), designs, manufactures and sells high
performance, business quality videoconferencing systems, services and
accessories throughout a worldwide direct and indirect sales network including
resellers, distributors and OEM or private label partners. The former RSI
Systems, Inc. was incorporated under the laws of Minnesota on December 21, 1993.

RESULTS OF OPERATIONS

THREE MONTHS ENDED MARCH 31, 2002 COMPARED TO THREE MONTHS ENDED MARCH 31, 2001

Net Sales. Net sales for the third quarter of fiscal year 2002 were $1,758,774,
up 147% from $713,074 in the third quarter of fiscal year 2001. The increase in
sales in the third quarter of fiscal year 2002 was primarily a result of higher
sales volume associated with the Company's new sales efforts in North America
through RSI Marketing, LLC (RSIM).

During the third quarter, the Company sold its products in North America under
an exclusive sales and marketing arrangement with RSIM. The primary goal for
RSIM has been to sell the Company's products directly to end users. The majority
of these accounts are either significant in size or their requirements dictate
direct interaction with the manufacturer (the Company). Though it is not
Viseon's intention to compete with its other distribution channels, many of the
organizations which make larger purchases of videoconferencing equipment have
dictated that the manufacturer provide specialized services (be they domestic or
global) or modify products for their specific application. The increased level
of sales during the third quarter of fiscal year 2002 was a direct result of the
sales and marketing efforts of RSIM. As of December 31, 2001 RSIM had met the
sales targets required for the first period of the arrangement. The second
performance period in the agreement runs from January 1 through December 31,
2002.

Historically, and continuing through the third quarter of fiscal year 2001, the
Company's sales in North America were comprised of sales on a direct basis to
end users as well as sales to third party resellers and distributors. In the
third quarter of fiscal year 2002, the Company focused its North American sales
efforts primarily toward end users, except for sales to a limited number major
distributors. This focus on end users and major distributors is expected to
continue in the future.

Gross Profit. Gross profit was $352,962 for the third quarter ended March 31,
2002 compared to a gross profit of $346,576 during the third quarter of fiscal
year 2001. Cost of goods sold as a percentage of net sales for the third quarter
of fiscal year 2002 were 80% compared to 51% during the third quarter of fiscal
year 2001. The higher cost of goods sold as a percent of net sales during the
third quarter of fiscal year 2002 compared to the third quarter of fiscal year
2001 was due to changes in the mix of products shipped and a shift in the
Company's primary distribution strategy compared to the previous period. During
the third quarter of fiscal year 2002, the proportion of sales generated from
products purchased from other manufacturers increased significantly compared to
the same quarter in the previous fiscal year. These products were sold at gross
margins which are substantially lower than products owned and produced by the
Company. In contrast, Company-produced products formed the primary basis for
sales in the third quarter of fiscal year 2001.


                                       13
<PAGE>


Downward market pressure on the pricing of videoconferencing units continued to
remain strong during the third quarter of fiscal year 2002 and is expected to
continue. This price pressure also contributed to the higher level of costs as a
percentage of net sales during the third quarter of fiscal year 2002, compared
to fiscal year 2001.

The trend toward lower gross margin percentages in fiscal year 2002 compared to
fiscal year 2001 is expected to continue in the short term, due to the Company's
strategy of increasing its installed base of videoconferencing units with the
primary concentration of sales coming from products manufactured by others that
carry lower margins than Company-owned products. However, the Company is
actively pursuing additional hardware, software and service product offerings in
order to increase revenue streams or gross margin percentages or both, with the
overall goal of increasing gross margin dollars compared to historical levels.
The ultimate success in creating these additional revenue streams and the timing
and results of these efforts on gross margin dollars cannot be reasonably
determined.

Research and Development Expenses. Research and development expenses were
$47,339 for the third quarter of fiscal year 2002, or 3% of net sales, compared
to research and development expenses of $129,680 or 18% of net sales for the
third quarter of fiscal year 2001. Actual expenses decreased approximately
$82,000 as a result of lower head count associated with the Company's strategy
of broadening its current product offerings through new relationships with other
manufacturers, and the acquisition or sharing of product technology as opposed
to internally funded development.

Selling, General and Administrative Expenses. Selling, general, and
administrative expenses were $210,244 for the three-month period ended March 31,
2002 or 12% of sales, compared to $518,211 or 73% of sales for the three-month
period ended March 31, 2001. The decrease in the percentage of sales was due to
a combination of increased sales during the third quarter of fiscal year 2002
compared to the third quarter of fiscal year 2001 and a lower level of expenses,
due entirely to factors which are not expected have a continuing similar effect
in future quarters as described below.

The lower overall level of selling, general and administrative expenses during
the three-month period ended March 31, 2002 was a direct result of a) reductions
to sales commission accruals of approximately $145,000, b) a reduction of
accounts receivable reserves of approximately $84,000 and c) a reduction in
compensation expense associated with variable stock option accounting of
approximately $196,000. Excluding these reductions in expenses, accruals and
reserves, selling, general and administrative expenses for the three-month
period ended March 31, 2002 were approximately $635,000, or 36% of sales. This
higher level spending on selling, general and administrative expenses for the
third quarter of fiscal year 2002 (after excluding the $425,000 in reductions
outlined above), compared to the third quarter of fiscal year 2001, was
primarily a result of increased sales expenses and costs for personnel and
infrastructure associated with increased sales activity in North America.


                                       14
<PAGE>


As a result of the foregoing, net earnings for the third quarter of fiscal year
2002 were $74,365, or $.01 per common share compared to a net loss of $(348,126)
or $(.04) per common share in the third quarter of fiscal year 2001. The
following table summarizes net earnings for the third quarter of fiscal year
2002, along with the effects that variable stock option accounting adjustments
and other significant unusual items discussed above had on net earnings (loss)
for the third quarter of fiscal year 2002. This information is presented because
the effects of such items are significant and are not indicative of future
results or performance by the Company.

                        Three Months ended March 31, 2002

<TABLE>
<CAPTION>
----------------------------- ---------------------- ---------------------- -------------------- ---------------------
                              Sales, general and     Net income (loss)      Basic earnings per   Diluted earnings
                              administrative                                share                per share
                              expenses
----------------------------- ---------------------- ---------------------- -------------------- ---------------------
<S>                                    <C>                      <C>                  <C>                  <C>
As reported amounts               $    210,244                  74,365           $   0.01                 0.00

----------------------------- ---------------------- ---------------------- -------------------- ---------------------
Items not indicative of
performance during the
period:

----------------------------- ---------------------- ---------------------- -------------------- ---------------------
Reduction in sales expenses
(note 1)                               145,000                (145,000)              n/a                  n/a

----------------------------- ---------------------- ---------------------- -------------------- ---------------------
Reduction in allowance for
doubtful accounts                       84,000                 (84,000)              n/a                  n/a
(note 2)

----------------------------- ---------------------- ---------------------- -------------------- ---------------------
Reduction in  compensation
expense due to variable
accounting                             196,000                (196,000)              n/a                  n/a
(note 3)

----------------------------- ---------------------- ---------------------- -------------------- ---------------------

Balance excluding the
effects of items above            $    635,244                (350,635)          $   (.03)                (.03)

----------------------------- ---------------------- ---------------------- -------------------- ---------------------
</TABLE>

         NOTE (1) - During the third quarter of fiscal year 2002, the Company
         lowered estimated commission expenses recorded in previous quarters by
         approximately $93,000, which were associated with RSI Marketing, LLC
         (RSIM). This reduction in commission expense related to the six-month
         period ended December 31, 2001 was primarily a result of clarification
         of the original terms of the contract between RSIM and the Company,
         relative to the treatment of indirect overhead costs associated with
         shipping, inventory and warehousing, and other operations activities.
         In addition, the Company lowered cumulative commissions which were
         expensed from July 1, 2001 through December 31, 2001 by approximately
         $52,000, in order to more properly match such commissions with the
         associated deferred revenues from maintenance service contracts. The
         effect of these changes to estimated and accrued commissions was to
         reduce selling, general and administrative expenses for the third
         quarter of fiscal year 2002, by approximately $145,000 that relates to
         the first two quarters of fiscal year 2002.

         NOTE (2) - Also in the third quarter of fiscal year 2002 the Company
         reduced its reserve for doubtful accounts by approximately $84,000. The
         reduction in doubtful account reserves as of March 31, 2002 was made
         based upon an analysis of all open accounts and historical write offs
         consistent with the Company's policy for estimating bad debts. Although
         the total level of outstanding accounts


                                       15
<PAGE>


         receivable as of March 31, 2002 increased significantly from June 30,
         2001, the Company has experienced a significant shift in the type of
         customer accounts comprising accounts receivable, toward larger, end
         user customers. This shift is a result of changes in the Company's
         distribution strategy which has been directed toward direct sales to
         medium and large sized companies as opposed to third party resellers
         and distributors. The reduction in the allowance for bad debts during
         the third quarter of fiscal year 2002 should not be considered
         indicative of future results. Future changes in the Company's business
         may have the opposite effect of significantly increasing the required
         allowance for bad debts and associated bad debt expense.

         NOTE (3) - Selling, general and administrative expenses for the third
         quarter of fiscal year 2002 were also offset by approximately $196,000
         due to a reduction of non-cash compensation expense recorded during the
         first two quarters of fiscal year 2002, caused by a lower market value
         of the Company's common stock as of March 31, 2002 compared to December
         31, 2001. The compensation expense reduction was made in accordance
         with the variable accounting rules for stock options under
         Interpretation No. 44 relative to certain modified stock options held
         by employees. Under the variable accounting rules, certain
         modifications made to stock options held by employees require future
         compensation expense increases or decreases, as the fair market value
         of the associated common stock changes, through the date the options
         are exercised. As of December 31, 2001, the Company had expensed a
         total of approximately $253,000 in connection with the modified options
         in fiscal years 2001 and 2002 combined. As of March 31, 2002, the
         market value of the Company's common stock declined from the December
         31, 2001 level, and this resulted in an associated reversal of $196,000
         in compensation previously expensed. The table above summarizes the
         effect of variable stock option accounting on the Company's expenses
         and net earnings (loss) for fiscal year 2002. Expenses during the third
         quarter of fiscal year 2001 were not affected, as the variable
         accounting treatment commenced during the fourth quarter of fiscal year
         2001.

As a result of the foregoing, net income for the third quarter of fiscal year
2002 was $74,365 or $.01 per common share compared to a net loss of $(348,126)
or $(.04) per common share for the third quarter of fiscal year 2001.

NINE MONTHS ENDED MARCH 31, 2002 COMPARED TO NINE MONTHS ENDED MARCH 31, 2001

Net Sales. Net sales for the nine-month period ended March 31, 2002 were
$6,018,866, up 122% from $2,708,751 for the nine-month period ended March 31,
2001. The increase in sales during the nine-month period ended March 31, 2002
was a result of higher sales volume associated with the Company's new sales
efforts in North America through RSIM.

Gross Profit. Gross profit was $1,648,712 for the nine-month period ended March
31, 2002, compared to a gross profit of $1,348,322 during the nine-month period
ended March 31, 2001. The increase in gross profit was a result of higher unit
sales volume. Cost of goods sold as a percentage of net sales for the nine-month
period ended March 31, 2002 were 73% compared to 50% during the nine-month
period ended March 31, 2001. The higher cost of goods sold as a percent of net
sales during the nine-month period ended March 31, 2002 was due to changes in
the mix of products shipped and a shift in the Company's primary distribution
strategy during the period, compared to the nine-month period ended March 31,
2001. During the nine-month period ended March 31, 2002 the proportion of sales


                                       16
<PAGE>


generated from products purchased from other manufacturers increased
significantly compared to the same period a year earlier. These products were
sold at gross margins which are lower than products owned and produced by the
Company. In contrast, Company-produced products formed the primary basis for
sales in the nine-month period ended March 31, 2001.

Research and Development Expenses. Research and development expenses were
$220,849, or 4% of sales for the nine-month period ended March 31, 2002,
compared to research and development expenses of $420,575, or 16% of sales for
the nine-month period ended March 31, 2001. The decrease in expenses as a
percentage of sales during the nine-month period ended March 31, 2002 was
primarily due to increased sales. Actual expenses decreased approximately
$200,000 during the nine-month period ended March 31, 2002 as a result of lower
head count associated with the Company's strategy of broadening its current
product offerings through new relationships with other manufacturers, and the
acquisition or sharing of product technology as opposed to internally funded
development.

Selling, General and Administrative Expenses. Selling, general, and
administrative expenses were $2,032,287 for the nine-month period ended March
31, 2002 or 34% of sales, compared to $1,583,503 or 58% of sales for the
nine-month period ended March 31, 2001. The higher level of spending on selling,
general and administrative expenses during the nine-month period ended March 31,
2002 was primarily a result of increased sales expenses and costs for personnel
and infrastructure associated with higher sales activity. In addition, the
Company experienced increased legal, accounting and insurance costs associated
with increased sales activity and other general corporate matters during the
nine-month period ended March 31, 2002 compared to the prior period. Finally,
the Company also had higher amortization expenses during the nine-month period
ended March 31, 2002 as a result of the acquisition of its ALRS product line in
April, 2001.

Other income (expense). Other income (expense) of $(13,434) decreased $149,900
for the nine-month period ended March 31, 2002 compared to other income
(expense) of $(163,334) for the nine-month period ended March 31, 2001. Included
in other income (expense) were license fees of approximately $100,000 recognized
in connection with the Company's patent protection activities during the first
quarter of fiscal year 2002. Interest expense for the nine-month period ended
March 31, 2002 was $126,699 compared to $170,985 for the nine-month period ended
March 31, 2001. Interest expense decreased during the nine-month period ended
March 31, 2002 as a result of lower levels of outstanding borrowings on the
Company's line of credit and lease obligations, and lower interest rates.

As a result of the foregoing, net loss for the nine-month period ended March 31,
2002 was $(617,858) or $(.05) per common share compared to a net loss of
$(819,090) or $(.09) per common share for the nine- month period ended March 31,
2001.


                                       17
<PAGE>


LIQUIDITY, CAPITAL RESOURCES AND MATERIAL CHANGES IN FINANCIAL CONDITION

CASH FLOWS FROM OPERATING ACTIVITIES

Net cash used in operating activities was $(1,518,198) during the nine-month
period ended March 31, 2002, compared to cash provided of $27,990 in the
nine-month period ended March 31, 2001.

Accounts receivable increased $932,103 from June 30, 2001 to March 31, 2002 as a
result of a strong sales increase during the third quarter of fiscal year 2002,
compared to the fourth quarter of fiscal year 2001 ended June 30, 2001. Sales in
the third quarter of fiscal year 2002 were $1,758,774, compared to $713,074 in
the fourth quarter of fiscal year 2001. A large proportion of the sales increase
came at the end of February and in the month of March 2002, resulting in a
substantial increase in the level of open account balances at March 31, 2002
compared to June 30, 2001.

Although accounts receivable increased substantially as of March 31, 2002,
compared to June 30, 2001 as noted above, the Company's overall reserve for
doubtful accounts receivable has remained relatively flat at $128,000 as of
March 31, 2002 and $144,000 as of June 30, 2001. The lower proportion of
accounts receivable reserves as of March 31, 2002 is due to changes in the
company's business and related customer base which has reduced the level of
necessary reserves. As noted above, the Company estimates doubtful account
reserves based upon an analysis of all open accounts and historical write-offs.
Shifts in the Company's distribution efforts toward sales to medium and large
sized end users instead of third party resellers and distributors has resulted
in lower overall credit risk associated with accounts receivable as of March 31,
2002 compared to June 30, 2001.

The Company carries foreign credit insurance on sales made with open account
terms to foreign buyers. This insurance covers a substantial portion of the
buyer and country risk on foreign accounts. In the event a foreign account is
determined to be un-collectable, the Company would file a claim on the insurance
policy. The credit policies and rules required by the underwriters of the policy
are extensive and in some cases judgmental. This could result in the denial of a
claim in certain instances if circumstances are interpreted in favor of the
underwriter. The Company considers its credit insurance policy as an important
factor that mitigates risk, and factors this into its assessment of the
reasonableness of its allowance for doubtful accounts. The Company believes it
has complied with the rules of its foreign credit insurance policy as of March
31, 2002.

Inventory also increased during the nine-month period ended March 31, 2002, by
$1,071,440 as a result of the Company's strategy to broaden its product line to
include products manufactured by other companies. Although the Company actively
sold these products during the first three quarters of fiscal year 2002, a
significant level of this inventory remained on hand at March 31, 2002.

The Company purchased a major portion of this new inventory on extended payment
terms from a few key vendors, resulting in an increase in accounts payable of
approximately $740,350 during the nine-month period ended March 31, 2002, which
partially offset the increased level of inventory and accounts receivable during
the period. The Company is carrying a balance owed to one such vendor of
approximately $500,000 as of March 31, 2002 which was past due beyond the
extended payment terms provided to the Company. The Company has agreed to
forward payments to the vendor in conjunction with sales of the related
inventory, until the account is fully paid. Funds for these payments are
obtained from the Company's working capital line of credit based on customer
billings.

Subsequent to March 31, 2002, the Company returned approximately $200,000 of
other inventory to separate vendor for full credit, as a result of sluggish
sales of the vendor's products.


                                       18
<PAGE>


As of March 31, 2002, inventories of $1,617,830 include an inventory valuation
reserve of approximately $283,000. This reserve reflects management's estimate
of the difference between inventory cost and market value of such inventory
which has been estimated at net realizable value from the sale of certain items
as individual components or as part of finished products. For such items, there
can be no assurance that the ultimate proceeds from the sale of such items will
be enough to cover the current estimated market value. If this is the case,
additional write-downs to inventory may be necessary in future periods.

Deferred revenue (net of Other Receivable) increased $217,604 as of March 31,
2002 compared to June 30, 2001. The increase in deferred revenue is associated
with an increase in the Company's sales efforts to domestic end users along with
a strategic focus on including full service product maintenance offerings with
each sale. Revenue from these maintenance contracts is recognized over the term
of the contract. The Company expects to continue selling service maintenance
products in the future.

CASH FLOWS FROM INVESTING ACTIVITIES

Purchases of equipment of $53,790 during the nine-month period ended March 31,
2002, were primarily the result of the Company capitalizing certain inventory to
be utilized for internal demonstration and test purposes.

CASH FLOW FROM FINANCING ACTIVITIES

The Company's original line of credit, including extensions, expired on August
26, 2001. The Company paid its former bank the entire amount of outstanding
principal and interest on the line of credit as of October 30, 2001.

On October 5, 2001, the Company received proceeds of $800,000 from Digital
Investors, LLC in the form of a subordinated note due October 5, 2002. The note
was secured by all the Company's assets and interest accrued quarterly at an
annual rate of 12%. In January 2002 the Company repaid the note, together with
accrued interest, from the proceeds of the remaining shares of common stock
purchased by Digital under the Stock Purchase Agreement as amended (see below).

In December 2001, the Company signed a new commercial loan agreement with a bank
for a $2,500,000 line of credit facility that matures in December 2002. The new
facility is secured by all corporate assets and provides working capital based
on a borrowing base comprised of accounts receivable and inventories. The new
facility also contains certain covenants and conditions, including minimum net
worth plus subordinated debt levels. Interest on outstanding borrowings accrues
at the prime rate plus 2.25% (7.0% at March 31, 2002). Outstanding borrowings
were $1,239,841 at March 31, 2002 net of an original issuance discount of
$39,839.

On January 18, 2002 the Company issued 2,314,285 shares of common stock
purchased by Digital at $.35 per share under an amended Stock Purchase Agreement
for a total gross price of $810,000. Net proceeds from the transaction were
$800,000 after applicable legal costs.


                                       19
<PAGE>


Also in January 2002, the Company repaid the note payable to Digital Investors
LLC, together with accrued interest, from the proceeds of the remaining shares
of common stock purchased by Digital under the Stock Purchase Agreement as
amended (see above).

LIQUIDITY

Even though sales have increased substantially during fiscal year 2002 compared
to levels in fiscal year 2001, an erosion in the Company's gross margin
percentages has resulted in the Company experiencing a significant loss from
operations through March 31, 2002. This has placed significant pressure on the
Company's financial condition and liquidity position. These conditions raise
concerns about the Company's ability to generate positive cash flows and fund
operations.

For the nine-month period ended March 31, 2002, the Company had a net use of
cash in operating activities of $(1,518,198). As of March 31, 2002, the Company
had an accounts payable balance of $1,808,110 although approximately $200,000 of
this amount was offset by a return of inventory to a vendor subsequent to March
31, 2002, leaving a balance of approximately $1,608,110 after the return. The
Company had minimal cash on hand and net accounts receivable of $1,461,567 as of
March 31, 2002. In connection with the requirements of the Company's loan
agreement with its bank, the Company must remit all cash collected from accounts
receivable to pay its outstanding line of credit. New advances on the line of
credit are permitted only as additional billings are generated. As a result of
its cash position and working capital deficit on March 31, 2002 the Company
requires additional working capital to continue operations in the short term and
coming calendar year.

Throughout fiscal year 2002, the Company has financed operations primarily
through loans from stockholders, sales of its common stock and borrowings on its
line of credit. The Company needs to generate additional cash from one or more
of these sources in the short term to continue operations in the near term. The
Company also needs to generate positive cash from operations in the future to
avoid continued erosion in its financial position which jeopardizes its ability
to obtain additional financing.

The following information identifies known trends or uncertainties relative to
the Company's liquidity and major sources of cash for the company as well as
managements' plans and intentions to avoid or mitigate these trends or
uncertainties and their potential effect on the Company's liquidity in the
future.

         1) THE COMPANY'S ABILITY TO INCREASE REVENUES AND GROSS MARGIN
         CONTRIBUTIONS AND MINIMIZE COSTS IS A CRITICAL SOURCE OF FUTURE CASH.
         As indicated from the first nine months of fiscal year 2002, although
         revenues have increased significantly from historical levels, the
         Company's gross margin percentages have declined as a result of changes
         to the Company's marketing strategy including the products sold by the
         Company. Competition in markets pursued by the Company in the past is
         intense and is expected to continue in the future.

         Management plans to continue to increase sales and improve operating
         results in the short term through 1) increased sales activity in North
         America through direct sales efforts and through other select
         distribution partners, 2) increased revenue streams from a broader line
         of product, service and network offerings as a result of joint
         development efforts with strategic partners, new distribution
         agreements or product and technology acquisitions and 3) continued
         efforts to streamline operations and minimize overhead.


                                       20
<PAGE>


         There can be no assurance that the Company will be able to increase
         sales of existing products sufficiently to generate positive cash flow
         from operations. In addition, there can be no assurance that the
         Company will be able to obtain sufficient products at prices acceptable
         to the Company that will allow it to avoid future margin erosion on the
         sales of existing products. Although the Company intends to identify
         and initiate new product offerings in the future to allow it to
         increase revenues and gross margin dollars, there can be no assurances
         that the Company will be successful in creating these incremental
         revenue and gross margin streams. If the Company is not successful in
         creating such incremental cash from increased revenue and gross margin
         contributions, the Company would continue to decrease expense levels to
         conserve cash, and management believes that such expense reductions
         could be made in a short period of time. However, there can be no
         assurance that such reductions would be sufficient to enable the
         Company to continue operations.

         2) THE COMPANY HAS INITIATED ACTIVITY NECESSARY TO PROTECT ITS
         INTELLECTUAL PROPERTY RIGHTS. THIS ACTIVITY HAS, IN THE PAST, CREATED
         ADDITIONAL CASH FOR THE COMPANY IN THE FORM OF SETTLEMENTS FROM THIRD
         PARTIES BELIEVED TO BE INFRINGING ON THE COMPANY'S INTELLECTUAL
         PROPERTY RIGHTS. As of March 31, 2002, the Company has initiated legal
         claims against three other Companies, and these activities are yet to
         be resolved. The Company believes that these activities may have a
         significant positive effect on the Company's liquidity in the future,
         but there can be no assurance that any of the matters currently in
         process will be settled to the benefit of the Company, or that any such
         settlement will result in increased cash quickly enough to generate
         additional liquidity for the Company in the near future.

         3) THE COMPANY RELIES HEAVILY ON ITS BANK LINE OF CREDIT TO FINANCE
         ONGOING WORKING CAPITAL requirements. This line of credit is
         discretionary in nature, and contains certain covenants and
         restrictions which the Company must operate under, including a
         requirement to maintain a certain minimum level of net worth. As of
         January 31, 2002, the Company's tangible net worth fell below the level
         required by its bank, and the requirements were adjusted by the bank
         for the remainder of calendar 2002. In addition, the Bank reduced the
         percentage of eligible inventory and the level of eligible foreign
         receivables against which the Company can borrow funds. The changes to
         eligible inventory and foreign receivables are not expected to
         significantly affect the liquidity of the Company in calendar 2002,
         primarily because a majority of the Company's borrowings are expected
         to be drawn against domestic accounts receivable, due to the Company's
         focus on domestic sales. As of March 31, 2002, the Company's tangible
         net worth was $396,121, which was in compliance with the revised
         tangible net worth covenant. However, the tangible net worth
         requirement increases on a monthly basis through December 5, 2002 to
         the required levels shown below.


                                       21
<PAGE>


         --------------------------- -----------------------------
         Date                        Minimum net tangible net
                                     equity requirement (Note 1)
         --------------------------- -----------------------------

         March 31, 2002                        $350,000
         --------------------------- -----------------------------

         April 30, 2002                         400,000
         --------------------------- -----------------------------

         May 31 - June 30, 2002                 450,000
         --------------------------- -----------------------------

         July 31 - August 31, 2002              500,000
         --------------------------- -----------------------------

         Sept 30 - Oct 31, 2002                 550,000
         --------------------------- -----------------------------

         Nov 30 - Dec 5, 2002                   600,000
         --------------------------- -----------------------------


                  NOTE 1 - Tangible net equity is defined in the Company's loan
                  agreement with its bank as Stockholders' equity less
                  intangible assets per Generally Accepted Accounting
                  Principles.

         There can be no assurance that the Company will be able to continue to
         maintain sufficient tangible net equity in the future to continue
         meeting the required loan covenant by the bank. In addition, since the
         line of credit is discretionary in nature, the bank could decide to
         terminate the Company's line of credit even if the Company was in
         compliance with all of the loan covenants and requirements. If this
         situation occurred, the Company would experience a significant and
         material negative effect on its liquidity, and would face a reasonable
         probability that the Company would be unable to continue operations.
         The Company would immediately seek additional debt or equity financing,
         but there can be no assurances that such efforts would be successful,
         or that such funds will be available at prices and on terms acceptable
         to the Company.

         Finally, the Company's line of credit expires on December 5, 2002. As
         noted above, the Company relies heavily on such line, and expects to
         renew the agreement prior to the expiration date with its bank. If such
         an agreement cannot be negotiated for any reason, the Company would
         expect to take steps to obtain alternate working capital financing.
         There can be no assurance that the Company will be able to achieve
         either of these objectives and the lack of such a continuing source
         working capital after December 5, 2002 would likely have significant
         and material negative effects on the Company's liquidity, including a
         reasonable probability that the Company would be unable to continue
         operations.

         4) IN THE PAST, THE COMPANY HAS RAISED ADDITIONAL CAPITAL FROM EXISTING
         SHAREHOLDERS THROUGH PRIVATE PLACEMENTS. The Company plans to raise
         additional capital from outside sources for future operations in the
         near term, but there can be no assurances that such efforts will be
         successful, or that such funds will be available on terms or at prices
         acceptable to the Company. The inability to raise such additional
         capital would likely have significant and material negative effects on
         the Company's liquidity including a reasonable probability that the
         Company would be unable to continue operations.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Our significant accounting policies are described in Note 1 to the consolidated
financial statements included in our Form 10-KSB for the year ended June 30,
2001. The accounting policies used in preparing our interim 2002 consolidated
condensed financial statements are the same as those described in our Form
10-KSB. Our critical accounting policies are those both having the most impact
to our reporting of our financial condition and results, and requiring
significant judgement and estimates.


                                       22
<PAGE>


                                     PART II
                                OTHER INFORMATION

Item 1.           LEGAL PROCEEDINGS

                  On March 7, 2002 the Company was named as a defendant in
                  Hennepin District Court in a suit bought about by Simplex Time
                  Recorder Corporation, (the Company's landlord) for past due
                  rent, interest and related legal fees of approximately
                  $84,000. The Company is in the process of reviewing such claim
                  and expects to negotiate a settlement with the plaintiff at an
                  amount less than the full amount claimed.

Item 2.           CHANGES IN SECURITIES

                  In January 2002, the Company issued 2,314,285 share of its
                  common stock to Digital Investors, LLC at $.35 per share under
                  the terms of an amended Stock Purchase Agreement for a total
                  gross price of $810,000.

                  In January 2002, the Company issued warrants to purchase
                  800,000 shares of its common stock for a price of $.75 per
                  share to Digital Investors LLC. The warrants have an exercise
                  period of nine years.

                  In February 2002, the Company issued 50,000 shares of its
                  common stock to a former employee in connection with the
                  cancellations of stock options under the terms of a severance
                  agreement.

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)   Exhibits - None.


                  (b)   Reports on Form 8-K:

                  On February 1, 2002, the Company filed a Form 8k announcing
                  The issuance of 2,314,285 shares of its common stock to
                  Digital Investors, LLC for $.35 per share in connection with
                  the terms of a Stock Purchase Agreement and related amendment
                  to the Stock Purchase Agreement.


                                       23
<PAGE>


                                   SIGNATURES


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.


                                        Viseon, Inc.




Dated: May 14, 2002                     /s/        John C. Harris
                                        ------------------------------------
                                                   John C, Harris
                                        Its President & Chief Executive Officer


                                        By:  /s/   James D. Hanzlik
                                            --------------------------------
                                                   James D. Hanzlik
                                        Its Chief Financial Officer



                                       24
<PAGE>


                           VISEON, INC. AND SUBSIDIARY
                                EXHIBIT INDEX TO
                FORM 10-QSB FOR THE QUARTER ENDED MARCH 31, 2002


  Item No.         Title of Document                 Method of Filing
  --------         -----------------                 ----------------


10.58              Amendment to Loan          Filed herewith electronically
                   Agreement


                                       25