<PAGE>

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

                                   (Mark One)

  [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                                      ACT
              OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2004

 [ ] 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.)

8445 Freeport Parkway, Suite 245, Irving, Texas              75063
------------------------------------------------             -----
  (Address of principal executive offices)                 (Zip Code)

                                 (972) 906-6300
                           (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 24,236,407 shares of Common Stock, $ 0.01 par value per share,
outstanding as of May 16, 2004.

Transitional Small Business Disclosure Format (Check one): Yes __ No X

<PAGE>

                                  Viseon, Inc.

                                      INDEX


<Table>
<S>                                                                                            <C>
PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements

Consolidated Balance Sheets
March 31, 2004 (unaudited) and June 30, 2003 ............................................       3

Consolidated Statements of Operations (unaudited) -
Three months ended March 31, 2004 and 2003...............................................       4

Consolidated Statements of Operations (unaudited) -
Nine months ended March 31, 2004 and 2003................................................       5

Consolidated Statements of Cash Flows (unaudited) - Nine
Months ended March 31, 2004 and 2003. ...................................................       6

Notes to Unaudited Consolidated Financial Statements.....................................       8

Item 2.  Management's Discussion and Analysis or Plan of Operation.......................      13

Item 3.  Controls and Procedures.........................................................      16

PART II  OTHER INFORMATION

   Item 1.  Legal Proceedings............................................................      16

   Item 2.  Changes in Securities and Use of Proceeds....................................      17

   Item 3.  Defaults Upon Senior Securities..............................................      17

   Item 4.  Submission of Matters to a Vote of Security Holders..........................      17

   Item 5.  Other Information............................................................      18

   Item 6.  Exhibits and Reports on Form 8-K.............................................      18

Signatures...............................................................................      18

Exhibit Index ...........................................................................      18
</Table>



                                       2
<PAGE>
                          PART I. FINANCIAL INFORMATION

Item 1.  Financial Statements

                         VISEON , INC. AND SUBSIDIARIES

                           Consolidated Balance Sheets

<TABLE>
<CAPTION>
                                                                       Mar 31,        June 30,
                                                                        2004            2003
                                                                    (Unaudited)      (Audited)
                                                                    --------------------------
<S>                                                                 <C>             <C>
                                          Assets
                                         --------
Current assets:
   Cash                                                             $  4,507,796    $      7,784
   Accounts receivable, net of allowance for doubtful
     accounts of $46,586 and $-                                           30,489          46,955
   Inventories, net                                                       52,959           7,079
   Prepaid expenses                                                      126,380          46,573
                                                                    ----------------------------
           Total current assets                                        4,717,624         108,391
                                                                    ----------------------------

Property and equipment:
   Furniture and equipment                                             1,802,631       1,801,026
   Leasehold improvements                                                  5,421           5,421
     Less accumulated depreciation and amortization                   (1,746,884)     (1,734,565)
Net property and equipment                                                61,168          71,882
                                                                    ----------------------------

Intangible assets, net                                                   219,556         110,898
                                                                    ----------------------------
                                          Total Assets              $  4,998,348    $    291,171
                                                                    ============================

                        Liabilities and Stockholders' Equity (Deficit)
                        ----------------------------------------------
Current liabilities:
   Subordinated notes payable                                       $          -    $    228,296
   Short-term notes payable                                                    -               -
   Accounts payable                                                    1,564,935       1,840,597
   Accrued expenses                                                      334,600         104,692
           Total current liabilities                                   1,899,535       2,173,585

Long-term liabilities

   Subordinated notes payable, net                                             -          23,333
                                                                    ----------------------------
           Total liabilities                                           1,899,535       2,196,918
                                                                    ----------------------------
Stockholders' equity (deficit):

     Preferred stock ($.01 par value per share, 5,000,000 shares
        authorized, 229 and - issued and outstanding                           -               -
     Common stock ($.01 par value per share, 50,000,000 shares
        authorized, 24,236,407 and 17,829,829 issued and
        outstanding)                                                     242,364         178,298
     Additional paid-in capital                                       29,267,916      24,179,469
     Accumulated deficit                                             (26,411,467)    (26,263,514)
                                                                    ----------------------------
        Total stockholders' equity (deficit)                           3,098,813      (1,905,747)
                                                                    ----------------------------
           Total Liabilities and Stockholders' Equity (Deficit)     $  4,998,348    $    291,171
                                                                    ============================

See accompanying notes to consolidated financial statements.
</TABLE>


                                       3

<PAGE>

                         VISEON, INC. AND SUBSIDIARIES

                      Consolidated Statements of Operations

<TABLE>
<CAPTION>
                                                              Three Months    Three Months
                                                                 Ended           Ended
                                                               March 31,        March 31,
                                                                  2004           2003
                                                              (Unaudited)     (Unaudited)
                                                              ---------------------------
<S>                                                           <C>             <C>
Net sales                                                     $     88,916    $     94,587
Cost of goods sold                                                  83,637          31,483
Reserve for inventories                                                  -        (276,600)
                                                              ----------------------------
          Gross profit (loss)                                        5,279         339,704

Research and development                                            46,718          15,033
Selling, general, and administrative                               693,065         699,777
                                                              ----------------------------
          Operating loss                                          (734,504)       (375,106)

Other income (expense):
    Interest expense                                              (563,750)        (80,397)
    Gain on sale of deferred revenue contracts                           -               -
    Other income (expense), net                                          -           1,706
                                                              ----------------------------
          Other income (expense), net                             (563,750)        (78,691)
                                                              ----------------------------
Loss before extraordinary item                                  (1,298,254)       (453,797)

Gain on extinguishment of debt, net of income taxes of $0           26,563               -
                                                              ----------------------------
          Net loss                                            $ (1,271,691)   $   (453,797)
                                                              ----------------------------
Preferred stock dividends                                     $     22,465    $          -
                                                              ----------------------------
          Loss attributable to common stockholders            $ (1,294,156)       (453,797)
                                                              ============================
Loss before extraordinary item per common share - basic       $      (0.06)   $      (0.03)
Loss before extraordinary item per common share - diluted     $      (0.06)   $      (0.03)
==========================================================================================
Gain on extinguishment of debt per common share - basic       $          -    $          -
Gain on extinguishment of debt per common share - diluted     $          -    $          -
==========================================================================================
Loss attributable to common stockholders per share - basic    $      (0.06)   $      (0.03)
Loss attributable to common stockholders per share - diluted  $      (0.06)   $      (0.03)
==========================================================================================
Weighted average shares outstanding - basic                     20,727,838      15,319,182
Weighted average shares outstanding - diluted                   20,727,838      15,319,182
==========================================================================================
</TABLE>

See accompanying notes to consolidated financial statements.

                                       4
<PAGE>

                         VISEON, INC. AND SUBSIDIARIES

                      Consolidated Statements of Operations

<TABLE>
<CAPTION>
                                                              Nine Months     Nine Months
                                                                 Ended           Ended
                                                               March 31,       March 31,
                                                                  2004            2003
                                                              (Unaudited)     (Unaudited)
                                                              ---------------------------
<S>                                                           <C>             <C>
Net sales                                                     $    156,776    $  1,009,647
Cost of goods sold                                                 143,977         959,294
Reserve for inventories                                            (66,830)        323,400
                                                              ----------------------------
          Gross profit (loss)                                       79,629        (273,047)

Research and development                                            76,485          60,239
Selling, general, and administrative                             1,772,129       2,143,846
                                                              ----------------------------
          Operating loss                                        (1,768,985)     (2,477,132)

Other income (expense):
    Interest expense                                              (982,223)       (319,299)
    Gain on sale of deferred revenue contracts                           -         314,712
    Other income (expense), net                                          -            (383)
                                                              ----------------------------
          Net Other Income (Expense)                              (982,223)         (4,970)
                                                              ----------------------------
Loss before extraordinary item                                  (2,751,208)     (2,482,102)
Gain on extinguishment of debt, net of income taxes of $0          377,311               -
                                                              ----------------------------
          Net loss                                              (2,373,897)     (2,482,102)
                                                              ----------------------------

Preferred stock dividends                                           22,465               -
                                                              ----------------------------
          Loss attributable to common stockholders            $ (2,396,362)   $ (2,482,102)
                                                              ============================
Loss before extraordinary item per common share - basic       $      (0.14)   $      (0.17)
Loss before extraordinary item per common share - diluted     $      (0.14)   $      (0.17)
                                                              ============================
Gain on extinguishment of debt per common share - basic       $       0.02    $          -
Gain on extinguishment of debt per common share - diluted     $       0.02    $          -
                                                              ============================
Loss attributable to common stockholders
  per common share - basic                                    $      (0.12)   $      (0.17)
Loss attributable to common stockholders
  per common share - diluted                                  $      (0.12)   $      (0.17)
                                                              ============================
Weighted average shares outstanding - basic                     19,354,080      14,823,818
Weighted average shares outstanding - diluted                   19,354,080      14,823,818
                                                              ============================
</TABLE>

See accompanying notes to consolidated financial statements.

                                       5
<PAGE>
                          VISEON, INC. AND SUBSIDIARIES

                      Consolidated Statements of Cash Flows

<Table>
<Caption>
                                                                    Nine Months Ended       Nine Months Ended
                                                                       March 31,                 March 31,
                                                                         2004                       2003
                                                                      (Unaudited)               (Unaudited)
-------------------------------------------------------------------------------------------------------------
<S>                                                                 <C>                      <C>
Cash flows from operating activities:
    Net loss                                                        $    (2,373,897)         $    (2,482,102)
    Adjustments to reconcile net loss to net cash
      flows from operating activities
      Depreciation and amortization                                          22,268                  266,320
      Amortization of original issue discount                               855,076                  176,558
      Compensation related to stock options                                  40,660                  (88,120)
      Warrants issued for services                                           39,871                  315,788
      Common stock issued for services                                      514,043                  253,924
      Loss on sale of equipment                                                 152                        -
      Gain on sale of deferred revenue contracts                                  -                 (314,712)
      Reserve for inventories                                               (66,830)                 323,400
      Gain on extinguishment of debt                                       (377,311)                       -
      Accounts receivable, net                                               16,466                1,170,371
      Inventories, net                                                       20,950                  610,154
      Prepaid expenses                                                      (79,807)                   4,846
      Cash issued in excess of cash in bank                                                          (51,919)
      Accounts payable                                                      (37,823)                 (27,158)
      Accrued expenses                                                      358,400                  (40,313)
      Deferred revenue                                                           -                    16,003
                                                                    ----------------------------------------
      Net cash provided by (used in) operating activities                (1,067,782)                 133,040
                                                                    ----------------------------------------

Cash flows from investing activities:
    Proceeds from sale of equipment                                           1,000                        -
    Payments for patent costs                                              (118,469)                       -
    Purchases of software, property and equipment                            (2,896)                  (5,283)
    Proceeds from sale of deferred revenue contracts                              -                        1
                                                                    ----------------------------------------
      NET CASH USED IN INVESTING ACTIVITIES                                (120,365)                  (5,282)
                                                                    ----------------------------------------
</Table>


                                       6
<PAGE>


                  VISEON, INC. AND SUBSIDIARIES

                Consolidated Statements of Cash Flows(continued)


<Table>
<Caption>
                                                                      Nine Months        Nine Months
                                                                         Ended              Ended
                                                                        March 31,         March 31,
                                                                          2004              2003
                                                                       (Unaudited)      (Unaudited)
-----------------------------------------------------------------------------------------------------
<S>                                                                  <C>               <C>
Cash flows from financing activities:
    Net repayments on revolving credit facility                                   -          (811,865)
    Payments of capital lease obligations                                         -            (4,017)
    Payments of notes payable                                              (202,936)                -
    Proceeds from subordinated notes payable                                110,000           223,000
    Proceeds from short term notes payable                                  155,000                 -
    Proceeds from issuance of convertible preferred
       stock and warrants                                                 5,725,000                 -
    Payment of preferred stock issuance cost                               (666,400)                -
    Proceeds from exercise of common stock warrants                         350,000                 -
    Proceeds from sale of common stock warrants                               5,000                 -
    Proceeds from issuance of common stock                                        -           610,000
    Proceeds from exercise of common stock options                          212,495            40,512
                                                                     --------------------------------
       Net cash provided by (used in) financing activities                5,688,159            57,630
                                                                     --------------------------------

       Net change in cash                                                 4,500,012           185,388

Cash at beginning of period                                                   7,784                 -
                                                                     --------------------------------

Cash at end of period                                                $    4,507,796    $      185,388
                                                                     --------------------------------

Supplemental cash flow information:
    Cash paid for interest, net of original issue discount           $       71,817    $       88,902
                                                                     --------------------------------

Noncash investing and financing activities
    Accounts payable converted to common stock                       $      130,246    $            -
    Short-term notes converted into common stock warrants            $       65,000    $            -
    Convertible notes converted into common stock                    $    1,254,726    $            -
                                                                     --------------------------------

</Table>



          See accompanying notes to consolidated financial statements.




                                       6
<PAGE>

                                  VISEON, INC.
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                             March 31, 2004 and 2003

1. DESCRIPTION OF THE BUSINESS:

Viseon, Inc. (the "Company"), a Nevada corporation formerly known as "RSI
Systems, Inc.", historically has been a developer of its own video conferencing
systems primarily sold to corporate end users and OEM customers such as Philips
Electronics, N.V. In May 2001, the former RSI Systems, Inc. was merged into its
wholly owned subsidiary Viseon, Inc. in order to change the domicile of the
Company to Nevada from Minnesota and to effect a simultaneous name change to
Viseon, Inc. The shareholders of RSI Systems, Inc. approved the Plan of Merger
between RSI Systems, Inc. and Viseon, Inc. on May 23, 2001. RSI Systems, Inc.
was incorporated under the laws of Minnesota on December 21, 1993. On July 25,
1995, it completed its initial public offering of its common stock, par value
$0.01 per share (the "Common Stock").

In January 2003, the Company changed its focus from being a group
videoconferencing systems manufacturer and reseller to a desktop and consumer
video communications systems developer, manufacturer and reseller. The only
measurable revenues that the Company is currently realizing are a result of
sales of the VisiFone(TM), the Company's personal videophone which operates on
broadband networks.

The VisiFone products are low-cost broadband videophone communication devices,
which can be used by both consumers and businesses. The VisiFone is a
self-contained system that does not require a PC or any external equipment for
its operation and the VisiFoneTV model utilizes a standard television monitor
for display. Both VisiFone models operate on any broadband connection and home
or office network including high-speed Internet connections via DSL or cable
modem. The VisiFone is available as either an ITU Standard, H.323 compliant
system which is compatible with most corporate video conferencing systems or as
a Session-Initiation-Protocol (SIP) compliant device, which is compatible with
many of the emerging Voice Over Internet Protocol (VOIP) telephony networks. The
VisiFone can be used in corporate, government and educational applications and
is priced such that it also has significant potential to be sold to residential
consumers who have subscribed to broadband Internet access via cable modem or
DSL of which there are currently over 25,000,000 subscribers in the U.S.

In addition to the sales of video communication devices, the Company has
generated revenues in prior years from its intellectual property portfolio,
which includes U.S. and foreign patents related to video communications. The
Company intends to enter into additional agreements whereby it may grant a
license of its intellectual property to third parties in furtherance of
developing proprietary consumer broadband videophone products and services.

The Company plans on undertaking the continued development of VisiFone products
and related services jointly with suitable, established developers and
manufacturers. The Company is currently in the process of identifying and
selecting prospective partners for the completion of its next generation of
VisiFone products and services. The Company has also become a distributor in the
U.S. of a broadband videophone manufactured by Leadtek, an Asian partner. The
Company plans on continuing to form new relationships with other companies to
distribute their products and services along with its own products.

 The Company is now selling VisiFone's in a variety of test markets in small
quantities. The current marketing strategy targets corporations with widespread
operations across regional, national and international boundaries as well as
residential consumers who have historically not purchased video communication
devices in the past. The Company has also provided VisiFone's for trials by a
number of providers of consumer broadband services via DSL or cable modem and
independent providers of VOIP services. The Company's objective is to have these
providers offer the VisiFone to their broadband consumers either as a
stand-alone service or in conjunction with their Voice Over Internet Protocol
offerings. These companies include the major U.S. cable television multi-system
operators, telephone companies and providers of VOIP services which are not
providers of broadband services directly.

                                       8
<PAGE>

All of these developments have affected and will continue to affect the
Company's financial model in terms of margins, cash flow requirements and
capital needs. The Company has a limited operational history with respect to the
sales of broadband videophones. There can be no assurance that the Company will
be able to succeed in implementing its strategy or that the Company will be able
to achieve positive cash flow or profitable operations as a result of these
changes in its business.

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,
2003 consolidated financial statements and related footnotes included in the
Company's Annual Report on Form 10-KSB.

The consolidated financial statements include the accounts of Viseon, Inc. and
its wholly owned subsidiaries, RSI Systems Ltd. a subsidiary in the United
Kingdom and Viseon PVT, Inc., a Nevada Corporation.

The consolidated financial statements reflect all adjustments, of a normal
recurring nature, necessary to fairly present the results of operations and
financial position of the Company for the interim periods. Operating results for
the three and nine months ended March 31, 2004 are not necessarily indicative of
the results that may be expected for the full year.

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, 2004 and June 30, 2003, the Company had
$1,998 and $2,758 respectively 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 were
amortized using the straight-line method over the term of the covenants. At June
30, 2003, these covenants were considered impaired and were written off.
Accumulated amortization of intangible assets was $40,044 and $30,234 at March
31, 2004 and June 30, 2003 respectively.

Revenue Recognition. The Company records sales revenue at the time products are
delivered. 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).

The SEC issued Staff Accounting Bulletin (SAB) No. 104, "Revenue Recognition."
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
collectibility is reasonably assured. The Company uses these criteria to
determine whether revenue can be recognized currently.

Accounts Receivable Reserves. The Company maintains allowances for doubtful
accounts for estimated losses resulting from the inability or unwillingness of
its customers to make required payments. If the financial condition of the
Company's customers declines resulting in an impairment of their ability to make

                                       9
<PAGE>

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.

Gain on Extinguishment of Debt. During the nine months ended March 31, 2004, the
Company negotiated discounted repayments related to amounts owed to creditors.
Based on these discounts, the Company recorded a gain on extinguishment of debt
of $377,311, which is reflected as an extraordinary item in the accompanying
statement of operations. The settlement of payables that took place during the
nine months ended March 31, 2004 is not an activity that occurs in the ordinary
course of business. This transaction is not typical in the environment in which
the Company operates. This type of transaction has not taken place prior to this
event. Therefore, the Company has recorded the recent transaction as an
extraordinary gain.

Net Loss Per Common Share. Basic net loss per common share is computed by
dividing the net loss by the weighted average number of common shares
outstanding for the reporting period. Diluted net loss per common share is
computed by dividing net loss by the sum of the weighted average number of
common shares outstanding plus the number of common share equivalents that
represent all additional shares of common stock that would have been outstanding
if all potentially dilutive securities (primarily stock options, stock warrants
and convertible debt) had been exercised. All options and warrants outstanding
during the three months and nine months ended March 31, 2004 and 2003 were
anti-dilutive.

4. CONVERTIBLE PREFERRED STOCK AND WARRANTS:

In the months of March and April 2004, the Company sold, in private placement
transactions, a total of 338 shares of Series A Convertible Preferred Stock in
prepackaged units which included one Series A-1 Warrant and one Series A-2
Warrant for each share of Series A Convertible Preferred Stock (collectively
referred to as the "Securities"). The private placement of the Securities
resulted in gross proceeds to the Company of $8,450,000, prior to offering
expenses. In total, holders of the 338 shares of Series A Convertible Preferred
Stock may acquire 16,900,000 shares of our common stock (8,450,000 shares of
common stock upon conversion and 8,450,000 shares upon exercise of warrants).
The Company's placement agent received an aggregate placement fee of $845,000
and warrants to purchase 1,267,500 shares of common stock.

Each share of Series A Convertible Preferred Stock is convertible, at the
initial conversion price of $1.00, into 25,000 shares of common stock, subject
to adjustment under certain conditions. Holders of the Series A Convertible
Preferred Stock are entitled to dividends at the rate of 10% per annum payable
quarterly in either cash or, at the option of the Company, registered shares of
common stock valued at fair market value. Shares of Series A Convertible
Preferred Stock are convertible into shares of common stock at the holders'
option at any time and will automatically convert to shares of common stock if
certain trading volume and closing price targets on the Company's common stock
are met at various intervals. In addition, shares of the Series A Convertible
Preferred Stock participate on an as-if converted basis in any dividends paid on
Common Stock. Holders of shares of Series A Convertible Preferred Stock are
entitled to voting rights together with the Common Stock, on an as-if converted
basis.

The conversion price of the Series A Convertible Preferred Stock is subject to
appropriate adjustment in the event of stock splits, stock dividends, reverse
stock splits, capital reorganizations, recapitalizations, reclassifications, and
similar occurrences as well as the issuance of common stock in consideration of
an amount less than the then-effective conversion price.

The holder of each Series A-1 Warrant is entitled to purchase 12,500 shares of
common stock at an exercise price of $1.08 per share for a term of five years
from the date of issuance. The holder of each Series A-2 Warrant is entitled to
purchase 12,500 shares of Common Stock at an exercise price of $1.26 per share
for a term of five years from the date of issuance. The exercise price of the
Series A-1 and Series A-2 Warrants is subject to adjustment for the issuance of
common stock in consideration of an amount less than the then effective exercise
price.

                                       10
<PAGE>

The Securities and the underlying shares of common stock have not been
registered under the Securities Act of 1933, as amended, and may not be offered
or sold in the United States in the absence of an effective registration
statement or exemption from registration requirements. The Company has filed a
registration statement with the U.S. Securities and Exchange Commission which is
currently pending review. The Company has also agreed to cause this registration
statement to be declared effective on or before August 4, 2004, and to
continuously remain effective thereafter, until all such common stock may be
sold without regard to an effective registration statement. Failure to file or
maintain a continuously effective registration statement will subject the
Company to liability to certain holders of shares of Series A Convertible
Preferred Stock in the form of liquidated damages totaling as high as $253,500
per month.

In addition to a placement fee paid in cash, the Company's placement agent
received warrants to purchase a total of 1,267,500 shares of common stock at a
purchase price of $1.00 per share for a term of five years from the date of
issuance (the "Series A-1-AGENT Warrants"). The exercise price of the Series
A-1-AGENT Warrants is subject to adjustment for the issuance of common stock in
consideration of an amount less than the then effective exercise price.

As of March 31, 2004, the Company had sold 229 shares of Series A Convertible
Preferred Stock resulting in gross proceeds of $5,725,000. The Company's
placement agent was paid a fee of $572,500 and received warrants to purchase
858,750 shares of common stock. Proceeds from the private placement were
allocated to the warrants ($3,476,590) using the Black-Scholes pricing model and
to the beneficial conversion option ($2,248,410) based upon the intrinsic value
of the conversion option.

5. DEBT:

In several transactions in fiscal 2002 and 2003, the Company issued convertible
promissory notes with warrants to six different lenders in exchange for cash
and, in some cases, the assumption of debt. The aggregate principal amount of
the notes was $1,106,706. Proceeds were allocated between the notes and
warrants, which were valued using the Black-Scholes pricing model. The resulting
aggregate original issue discount of $1,106,706 (the fair value of the warrants)
was being amortized over the life of the notes using the straight-line method,
which approximated the interest method. The Company had been unable to repay
interest and principal on the notes when due.

As of December 31, 2003, the Company obtained a waiver from each of its
convertible note holders for its failure to make quarterly interest payments
when due, and where applicable, to repay the notes on maturity. The terms of the
waiver required the Company to repay all accrued interest and past-due principal
balances no later than March 31, 2004. The waiver also clarified the Company's
obligation to include all of the underlying common shares for both the
convertible note and warrants associated with the indebtedness in the Company's
next registration statement filing.

In conjunction with the sale of the Series A Convertible Preferred Stock (see
Note 4), the holders of the convertible promissory notes entered into agreements
dated March 15, 2004 to convert such notes (totaling $1,254,726, including
principal and accrued interest) into 4,182,422 shares of common stock and to
release all collateral securing the repayment of such notes. The total principal
and interest of the notes is reflected in the accompanying consolidated balance
sheet as a long-term liability under the caption "Convertible Notes Payable" at
March 31, 2004. The remaining original issue discount of $432,308 was amortized
to interest expense during March 2004.

6. COMMITMENTS AND CONTINGENCIES:

a) Manufacturing Agreement

   On August 28, 1996, the Company entered into a manufacturing agreement with a
   third party custom manufacturer (the "Manufacturer"). Pursuant to this
   agreement, the Manufacturer agrees to produce the Company's videoconferencing
   products including the MediaPro (R) and warrants that all products will be
   free from defects in material and workmanship for twelve months from the date
   the Company ships any such product to the customer or fifteen months from the


                                       11
<PAGE>

   date the Manufacturer ships to the Company, whichever comes first. 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 would be obligated to pay for material and work in
   progress for products ordered.

   On June 30, 2003, the Company and the Manufacturer agreed that the Company
   would no longer place orders for its MediaPro384(R) group videoconferencing
   product line from the manufacturer. The agreement has not yet been
   terminated; however, the Company and the Manufacturer have entered into
   discussions regarding the potential obligation that may arise from the
   termination of the agreement. The total amount claimed by the manufacturer is
   approximately $1,127,000. The Company has accrued an estimate of that
   potential liability of $518,500 which is included in accounts payable in the
   accompanying balance sheet.

b) 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, above the then current market price of Viseon Common Shares. Of
   these, 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, which to date
   have not been met. In connection with the agreement, 37,500 warrants vested
   and were valued at $7,735 using the Black-Scholes pricing model during the
   third quarter of fiscal year 2004. As of March 31, 2003, all 500,000 warrants
   vested. The warrants expire in February 2006.

c) The Company is subject to certain litigation and claims arising in the
   ordinary course of business.

7. STOCKHOLDERS' EQUITY (DEFICIT):

   For the three months ended March 31, 2004, 71,699 shares were issued pursuant
   to the 2003 Consultant Compensation Plan in payment of approximately $73,607
   in services rendered.

   In February 2004, the Company issued five-year warrants to acquire 150,000
   shares of common stock for $1.17 per share to one of its lenders in exchange
   for their agreement to loan the Company approximately $150,000.

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. The forward-looking statements
subject to certain risks and uncertainties, which could cause actual results to
differ materially from those, indicate 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.

                                       12
<PAGE>

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.

Item 2. Management's Discussion and Analysis or Plan of Operation

RESULTS OF OPERATIONS

Three Months ended March 31, 2004 Compared to Three Months ended March 31, 2003.

Net Sales. Net sales for the third quarter of fiscal year 2004 were $88,916 down
6.0% from $94,587, in the third quarter of fiscal year 2003. The decrease in
sales in the third quarter of fiscal year 2004 compared to 2003 was a result of
a modest increase in sales volume associated with the Company's sales of the
VisiFone in 2004 offset by approximately $30,000 in sales of the remainder of
the Company's group video conferencing products included in net sales for the
third fiscal quarter of 2003.

Gross Profit. Gross profit was $5,279 in the third quarter of fiscal year
2004 compared to a gross profit of $339,704 during the third quarter of fiscal
year 2003. The gross profit in the third quarter of fiscal 2004 was 5.9% of net
sales as the Company sold the VisiFone at low margins to corporate, government
and educational customers for demonstration and evaluation purposes. Gross
profit during the third quarter of fiscal year 2003 was 359.1% of net sales
because of decrease in the reserve for inventories recognized in previous
periods.

Research and Development Expenses. Research and development expenses were
$46,718 for the third quarter of fiscal year 2004 (52.5% of net sales) compared
to $15,033 or 15.9% of net sales for the third quarter of fiscal year 2003. The
increase was attributable to increased expenditures toward the development of
Company's VisiFone product line. The Company anticipates that research and
development expenses will increase significantly over the next several quarterly
periods as the Company continuous development of the VisiFone product line.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses were $693,065 or 779.5% of net sales for the third
quarter of fiscal year 2004 compared to $699,777 or 739.8% of net sales for the
third quarter of fiscal year 2003. Payroll and consulting fees comprise
approximately half of such expenditures for both periods.

Other Income (Expense). Other expense was $563,750 in the third quarter of
fiscal year 2004, compared to other expense of $78,691 in the third quarter of
fiscal year 2003. The net increase of $485,059 is due to increased interest
expense related to the amortization of original issue discount on certain of the
Company's promissory notes payable. In conjunction with the sale of the Series A
Convertible Preferred Stock, the holders of certain of the Company's convertible
promissory notes entered into agreements to convert such notes (totaling
$1,254,726, including principal and accrued interest) into 4,182,422 shares of
common stock and to release all collateral securing the repayment of such notes.
As a result, the Company accelerated the amortization of the related original
issue discount and recorded a charge of $514,469 to interest expense during the
third quarter of fiscal 2004.

                                       13
<PAGE>

Gain on Extinguishment of Debt. During the third quarter of fiscal 2004, the
Company negotiated discounted repayments related to amounts owed to certain
creditors. Based on these discounts, the Company recorded a gain on
extinguishment of debt of $26,563.

Preferred Stock Dividends. The results of operations for the third quarter of
fiscal 2004 reflects a charge of $22,465 for accrued dividends on the Company's
Series A Convertible Preferred Stock which bears dividends at the rate of 10%.
Allocation to beneficial conversion is $2,248,940.

Nine Months ended March 31, 2004 Compared to Nine Months ended March 31, 2003.

Net Sales. Net sales for the nine months ended March 31, 2004 were $156,776,
down 84.5% from $1,009,647 for the nine months ended March 31, 2003. The
decrease in sales in 2004 compared to 2003 was a result of significant reduction
in overall sales volume as the net sales for 2003 included sales of the
Company's remaining inventory of group video conferencing systems.

Gross Profit. Gross profit was $79,629 for the nine months ended March
31, 2004 compared to a gross loss of $(273,047) during the same period in fiscal
year 2003. The gross loss in fiscal 2003 resulted from inventory write-downs and
low margin sales from the group video conferencing products.

Research and Development Expenses. Research and development expenses were
$76,485 for the nine months ended March 31, 2004 (48.8% of net sales) compared
to $60,239 or 6.0% of net sales for the same period in fiscal year 2003. The
increase was attributable to increased expenditures toward the development of
the Company's VisiFone product line. The Company anticipates that research and
development expenses will increase significantly over the next several quarterly
periods as the Company continuous development of the VisiFone product line.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses were $1,772,129 or 1,130.4% of net sales for the nine
months ended March 31, 2004 compared to $2,143,846 or 212.3% of net sales for
the same period in fiscal year 2003. The decrease in selling, general and
administrative expenses was due to lower head-count required to support the
Company's personal videophone products as compared to the level of staff and
lower selling expenses required to support the previous line of group video
conferencing products. Payroll and consulting fees comprise approximately half
of such expenditures for both periods.

Other Income (Expense). Other expense was $982,223 for the nine months ended
March 31, 2004 compared to other expense of $4,970 during the same period in
fiscal 2003. The net increase of $977,253 is due to increased interest expense
related to the amortization of original issue discount on certain of the
Company's promissory notes payable and a one-time gain of $314,712 on the sale
of deferred revenue contracts in fiscal 2003. In conjunction with the sale of
the Series A Convertible Preferred Stock, the holders of certain of the
Company's convertible promissory notes entered into agreements to convert such
notes (totaling $1,254,726, including principal and accrued interest) into
4,182,422 shares of common stock and to release all collateral securing the
repayment of such notes. As a result, the Company accelerated the amortization
of the related original issue discount and recorded a charge of $514,469 to
interest expense during the third quarter of fiscal 2004.

Gain on Extinguishment of Debt. During the second and third quarters of fiscal
2004, the Company negotiated discounted repayments related to amounts owed to
certain creditors. Based on this discount, the Company recorded a gain on
extinguishment of debt of $377,311.

Preferred Stock Dividends. The results of operations for the nine months ended
March 31, 2004 reflect a charge of $22,465 for accrued dividends on the
Company's Series A Convertible Preferred Stock which bears dividends at the rate
of 10%. Allocation to beneficial conversion is $2,248,410.

LIQUIDITY AND CAPITAL RESOURCES

The Company recently raised $8,450,000 million (prior to offering expenses) from
the sale of its Series A Convertible Preferred Stock with warrants in a series
of private placement transactions in March and April 2004. Management believes
that the funds generated from its recent private placement financing activities
will

                                       14
<PAGE>

be sufficient to cover the cash needs of the Company in the foreseeable future,
although there can be no assurance in this regard.

Historically, the Company has generated losses from operations and negative cash
flows. For the quarter ended March 31, 2004, the Company raised $5,058,914 from
the sales of Series A Convertible preferred Stock with warrants, used $521,753
in operating activities and $29,742 in investing activities. Management plans to
try to increase sales and improve operating results through (i) increased
marketing and direct sales activities to corporate customers, (ii) continued
initiatives to gain acceptance of our product by consumer broadband providers
for sale to their subscribers and (iv) initiatives to monetize our intellectual
property rights. There can be no assurance that we will be successful in
achieving these objectives and becoming profitable.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The preparation of financial statements in accordance with accounting principles
generally accepted in the United States requires us to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of net revenues and
expenses during the reporting period. We regularly evaluate our estimates and
assumptions related to net revenues, allowance for doubtful accounts, sales
returns and allowances, inventory reserves, goodwill and purchased intangible
asset valuations, warranty reserves, restructuring cost, litigation and other
contingencies. We base our estimates and assumptions on historical experience
and on various other factors that we believe to be reasonable under the
circumstances, the results of which form the basis for making judgments about
the carrying values of assets and liabilities that are not readily apparent from
other sources. To the extent there are material differences between our
estimates and the actual results, our future results of operations will be
affected.

Revenue Recognition

We believe the following critical accounting policies required us to make
significant judgments and estimates in the preparation of our consolidated
financial statements:

We do not recognize revenue until all of the following criteria are met:
persuasive evidence of an arrangement exists; delivery has occurred or services
have been rendered; our price to buyer is fixed or determinable; and
collectibility is reasonably assured.

When product sales revenue is recognized, we establish and estimated allowance
for future product returns based on historical returns experience; when price
reductions are approved, we establish an estimated liability for price
protection payable on inventories owned by product resellers. Should actual
product returns or pricing adjustments exceed our estimates, additional
reductions to revenue would result. Revenue from the licensing of patents is
recognized at the time a patent agreement is executed and the goods, services
and/or cash are received. Our product typically carries a ninety-day to
five-year warranty. Although we engage in extensive product quality programs and
processes, our warranty obligation is affected by product failure rates, use of
materials or service delivery cost that differ from our estimates. As a result,
additional warranty reserves could be required, which could reduce gross
margins.

Allowance for Doubtful Accounts

We maintain an allowance for doubtful accounts for estimated losses resulting
from the inability of our customers to make required payments. Our allowance for
doubtful accounts is based on our assessment of the collectibility of specific
customer accounts, the aging of accounts receivable, our history of bad debts
and the general condition of the industry. If a major customer's credit
worthiness deteriorates, or our customers' actual defaults exceed our historical
experience, our estimates could change and impact our reported results.

Inventory Valuation

Our policy is to value inventories at the lower of cost market on a part-by-part
basis. This policy requires us to make estimates regarding the market value of
our inventories, including an assessment of excess and obsolete inventories. We
determine excess and obsolete based on an estimate of the future sales demand
for our product within a specified time horizon, generally 24 months. The
estimates we use for demand are also used for near-term capacity planning and
inventory purchasing is consistent with our revenue forecast.

                                       15
<PAGE>

If our sales forecast is less than the inventory we have on hand at the end of
an accounting period, we may be required to take excess and obsolete inventory
charges, which will decrease gross margin and net operating results for that
period.

Item 3. Controls and Procedures

As of the end of the period covered by this report, the Company conducted an
evaluation, under the supervision and with the participation of the Chief
Executive Officer and Chief Financial Officer, of the effectiveness of the
Company's disclosure controls and procedures (as defined in Rules 13a-15(e) and
15d-15(e) under the Securities Exchange Act of 1934 as amended (the "Exchange
Act")). Based on this evaluation, the Chief Executive Officer and Chief
Financial Officer concluded that the Company's disclosure controls and
procedures as of the end of the fiscal quarter covered by this Quarterly Report
on Form 10-QSB are effective to ensure that information required to be disclosed
by the Company in reports that it files or submits under the Exchange Act is
recorded, processed, summarized and reported within the time periods specified
in Securities and Exchange Commission rules and forms. Management of the Company
has also evaluated, with the participation of the Chief Executive Officer and
Chief Financial Officer of the Company, any change in the Company's internal
control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f)
under the Exchange Act) that occurred during the fiscal quarter covered by this
Quarterly Report on Form 10-QSB. There was no change in the Company's internal
control over financial reporting during the Company's most recently completed
fiscal quarter that has materially affected, or is reasonably likely to
materially affect, the Company's internal control over financial reporting.
However, due to the limited number of Company employees engaged in the
authorization, recording, processing and reporting of transactions, there is
inherently a lack of segregation of duties. The Company periodically assesses
the cost versus benefit of adding the resources that would remedy or mitigate
this situation and currently, does not consider the benefits to outweigh the
costs of adding additional staff in light of the limited number of transactions
related to the Company's operations.

                                     PART II
                                OTHER INFORMATION

Item 1. Legal Proceedings

On June 22, 2001, the Company initiated a suit in the United States District
Court for the District of Minnesota, Hennepin County, Minnesota against Forgent
for reasonable royalties and lost profits associated with alleged infringement
of the Company's first two U.S. patents numbers 6,073,192 and 5,802,281. The
United States District Court granted a partial summary judgment in favor of
Forgent, which resolved certain claims advanced. Forgent and the Company
thereafter submitted briefs on the remaining issues, which included the payment
of attorneys' fees and the dismissal of the litigation. On November 24, 2003,
the Court dismissed the action finding that said Court lacked subject matter
jurisdiction over the action and ruled that each party bear its own attorney's
fees and costs. Subsequent to such ruling, on December 23, 2003, Forgent filed a
brief in support of its motion for reimbursement of legal fees and costs. The
Company timely filed a reply brief in response thereto in support of its
position that the motion was moot as the issue raised therein had been
previously ruled on and resolved by November 24, 2003 order. The United States
District Court has yet to render a decision on this matter and the Company
intends to continue to vigorously defend against the claims asserted.

The Company is subject to certain other litigation and claims arising in the
ordinary course of business. Management believes the amounts ultimately payable,
if any, as a result of such claims and assessments will be less than the
required disclosure thresholds of the U.S. Securities and Exchange Commission
(the "Commission").

                                       16
<PAGE>

Item 2. Changes in Securities

In the months of March and April 2004, the Company sold to a total of 40
accredited investors convertible preferred stock and warrants in private
placement transactions resulting in gross proceeds to the Company of $8,450,000,
prior to offering expenses. A total of 338 shares of Series A Convertible
Preferred Stock were sold in prepackaged units which included one Series A-1
Warrant and one Series A-2 Warrant for each share of Series A Convertible
Preferred Stock. In total, holders of the 338 shares of Series A Convertible
Preferred Stock may acquire 16,900,000 shares of our common stock (8,450,000
shares of common stock upon conversion and 8,450,000 shares upon exercise of
warrants). The placement agent received an aggregate placement fee of $845,000
and warrants to purchase 1,267,500 shares of common stock The issuances of the
preferred stock and the warrants are claimed to be exempt, and the issuance of
the common stock into which the preferred stock may be converted and the common
stock underlying the warrants will be claimed to be exempt, pursuant to Rule 506
of Regulation D under the Act "). No advertising or general solicitation was or
will be employed in offering these securities. The offering and sale was made to
only accredited investors, and subsequent transfers were restricted in
accordance with the requirements of the Securities Act of 1933.

In March 2004, the holders of certain convertible promissory notes executed by
the Company at various dates in 2002 and 2003 converted a total of $1,254,726,
including principal and accrued interest, into 4,182,422 shares of common stock
at the conversion price of $0.30 per share and released all collateral securing
the repayment of such note. Exim, Inc., the holder of a promissory note executed
by the Company, dated June 30, 2003, converted all indebtedness owed by Viseon
pursuant to the note, inclusive of interest, totaling $210,039 into 700,131
shares of common stock. Henry Mellon, the holder of a promissory note executed
by the Company, dated June 30, 2003, converted all indebtedness owed by Viseon
pursuant to the note, inclusive of interest, totaling $210,039.into 700,131
shares of common stock. Judas, Inc, a Nevada corporation, the holder of a
promissory note executed by the Company, dated July 1, 2002, converted all
indebtedness owed by Viseon pursuant to the note, inclusive of interest,
totaling $242,755 into 809,183 shares of common stock. E. M. Norwood, the holder
of a promissory note executed by the Company, dated June 30, 2002, as amended by
that certain Amended Loan Agreement dated June 30, 2003, converted all
indebtedness owed by Viseon pursuant to the note, inclusive of interest,
totaling $121,377 into 404,591 shares of common stock. Active Management, LLC, a
Nevada limited liability company, the holder of a promissory note executed by
the Company, dated May 31, 2003, converted all indebtedness owed by Viseon
pursuant to the note, inclusive of interest, totaling $138,171 into 460,570
shares of common stock. Carbone Holdings, LLC, a Nevada limited liability
company, the holder of a promissory note executed by the Company, dated May 31,
2003, converted all indebtedness owed by Viseon pursuant to the note, inclusive
of interest, totaling $332,345 into 1,107,816 shares of common stock. . The
issuances of these shares are claimed to be exempt pursuant to Rule 506 of
Regulation D under the Act. No advertising or general solicitation was or will
be employed in offering these securities. The offering and sale was made to all
accredited investors (except for one unaccredited investor that the Company
reasonably believed immediately prior to its investment possessed such knowledge
and experience in financial and business matters that it was capable of
evaluating the merits and risks of the purchase of its securities), and
subsequent transfers were restricted in accordance with the requirements of the
Securities Act of 1933.

Item 3. Defaults upon Senior Securities
        None

Item 4. Submission of Matters to a Vote of Security Holders
        None

                                       17
<PAGE>

Item 5. Other Information

        None

Item 6. Exhibits and Reports on Form 8-K

        (a)  Exhibits

<TABLE>
<CAPTION>
Exhibit
Number                                     Description
<S>                <C>
 31.01             Certification pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934.
 32.01             Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
                   906 of the Sarbanes-Oxley Act of 2002.
</TABLE>

        (b)  Reports on Form 8-K

        During the quarter ended March 31, 2004, the Company filed three
        Current Reports on Form 8-K on March 18, 2004, March 22, 2004 and March
        25, 2004 reporting on the private placements of the Company's equity
        securities and filing the instruments creating the securities.

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 16, 2004                      By:   /s/ John C Harris
                                         -----------------------------
                                         John C. Harris
                                         Its President & Chief Executive Officer

Dated: May 16, 2004                      By:  /s/ Robert A. Wolf
                                         -----------------------------
                                         Robert A. Wolf
                                         Its Chief Financial Officer

                                       18