<PAGE>

                       U.S. SECURITIES AND EXCHANGE COMMISSION
                                WASHINGTON, D.C. 20549
                                           
                                     FORM 10-QSB
                                           
               [ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
                           SECURITIES EXCHANGE ACT OF 1934
                                           
                    For the quarterly period ended March 31, 1997
                                           
         [   ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
                                 EXCHANGE ACT OF 1934
                                           
                            Commission file number 0-27328
                                           
                                   DELTAPOINT, INC.
                (Exact Name of Registrant as specified in its charter)
                                           

          California                                     77-0216760
(State or Other Jurisdiction of                       (I.R.S. Employer
Incorporation or Organization)                      Identification Number)

                        22 Lower Ragsdale, Monterey, CA  93940
                       (Address of principal executive offices)
                                           
                                     408-648-4000
                 (Registrant's telephone number, including area code)
                                           
                                           
    Check whether the issuer (1) filed all reports required to be filed by 
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for 
such shorter period that the registrant was required to file such reports), 
and (2) has been subject to such filing requirements for the past 90 days.   
Yes   X    No
   -------   ------
                                           
   State the number of shares outstanding of each of the issuer's classes of 
common equity, as of April 30, 1997:  2,567,873

    Transitional Small Business Disclosure Format (check one)  Yes      No   X  
                                                                  -----    -----
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                                   DELTAPOINT, INC.
                                           
                                        INDEX
                                        -----
                                                                          
                                                                          Page
                                                                          ----
Part 1.  FINANCIAL INFORMATION    
                                           
         Item 1.   Financial Statements

                   Condensed Balance Sheets 
                   March 31, 1997 (unaudited) and December 31, 1996         3

                   Condensed Statements of Operations (unaudited)         
                   Three months ended March 31, 1997 and 1996               4

                   Condensed Statements of Cash Flows (unaudited)
                   Three months ended March 31, 1997 and 1996               5
              
                   Notes to Condensed Financial Statements                  6

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

Part II. OTHER INFORMATION

         Item 1.   Legal Proceedings                                       18

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

Signature                                                                  19



                                       2

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PART I.  FINANCIAL INFORMATION
ITEM I.  FINANCIAL STATEMENTS
                                   DELTAPOINT, INC.
                                           
                               CONDENSED BALANCE SHEETS
                       (IN THOUSANDS, EXCEPT NUMBER OF SHARES)
                                           
                                           
                                                          MARCH 31,     DEC. 31,
                                                            1997          1996
                                                        -----------    ---------
                                                        (UNAUDITED)
                        ASSETS

Current assets:
  Cash and cash equivalents...........................    $  1,548     $  3,142
  Accounts receivable, net of allowance for doubtful
    accounts of $118 and $118.........................       1,577        1,904
  Inventories.........................................         100          133
  Prepaid expenses and other current assets...........         326          557
                                                          --------     --------
      Total current assets............................       3,551        5,736
Property and equipment, net...........................         252          277
Purchased software, net...............................         261          299
Deposits and other assets.............................          29           34
                                                          --------     --------
                                                          $  4,093     $  6,346
                                                          --------     --------
                                                          --------     --------

        LIABILITIES AND SHAREHOLDERS' EQUITY 

Current liabilities:
  Accounts payable....................................    $  1,389     $  1,238
  Accrued liabilities.................................         993        1,146
  Reserve for returns.................................         483          771
  Notes payable.......................................       2,150        2,150
  Current portion of capital lease obligations........          --           --
                                                          --------     --------
      Total current liabilities.......................       5,015        5,305

Commitments and contingencies 
                        
Shareholders' (deficit) equity :
  Preferred Stock, no par value, 4,000,000 shares 
    authorized, none issued or outstanding............         ---          ---
  Common stock, no par value, 25,000,000 shares
    authorized 2,489,873 and 2,485,540 shares were 
    issued and outstanding............................      15,265       14,707
  Accumulated deficit                                      (16,187)     (13,666)
                                                          --------     --------
      Total shareholders' (deficit) equity...........         (922)       1,041
                                                          --------     --------
                                                          $  4,093     $  6,346
                                                          --------     --------
                                                          --------     --------

    The accompanying notes are an integral part of these condensed financial 
                                statements.
                                           
                                       3
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                                   DELTAPOINT, INC.
                                           
                          CONDENSED STATEMENTS OF OPERATIONS
                   (IN THOUSANDS, EXCEPT PER SHARE DATA, UNAUDITED)
                                           

                                                           THREE MONTHS ENDED
                                                                MARCH 31
                                                           -------------------
                                                             1997       1996
                                                           --------   --------
                        
Net revenues.........................................      $  1,023   $    760
Cost of revenues.....................................           320        338
                                                           --------   --------
  Gross profit.......................................           703        422
                                                           --------   --------
Operating expenses:
  Sales and marketing................................         1,459        888
  Research and development...........................           731        486
  General and administrative.........................           238        769
                                                           --------   --------
                                                              2,428      2,143
                                                           --------   --------
Loss from operations.................................        (1,725)    (1,721)
Interest and other (expense) income..................          (796)        17
                                                           --------   --------
Net loss.............................................      $ (2,521)  $ (1,704)
                                                           --------   --------
                                                           --------   --------
Net loss per share...................................      $  (1.01)  $  (0.79)
                                                           --------   --------
                                                           --------   --------
Shares used in per share calculations................         2,489      2,170
                                                           --------   --------
                                                           --------   --------
                        



     The accompanying notes are an integral part of these condensed financial
                                     statements.
                                           
                                       4    
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                                   DELTAPOINT, INC.
                                           
                          CONDENSED STATEMENTS OF CASH FLOWS
                              (IN THOUSANDS, UNAUDITED)
                                           
                                                           THREE MONTHS ENDED
                                                                MARCH 31
                                                           -------------------
                                                             1997       1996
                                                           --------   --------
                        
Cash flows from operating activities:
  Net loss............................................     $ (2,521)  $ (1,704)
  Adjustments to reconcile net loss to net cash used
    in operating activities:
    Depreciation and amortization.....................           70         37
    Amortization of discounted conversion feature of
      notes payable...................................          537         --
    Change in assets and liabilities:
      Accounts receivable.............................          327         46
      Inventories.....................................           33         52
      Prepaid expenses and other current assets.......          231        (36)
      Accounts payable................................          151        356
      Accrued liabilities.............................         (153)       (32)
      Reserve for returns.............................         (288)       231
      Deposits and other assets.......................            5         15
                                                           --------   --------
        Net cash used in operating activities.........       (1,608)    (1,035)
                                                           --------   --------

Cash flows from investing activities:
  Acquisition of property and equipment...............           (7)      (205)
                                                           --------   --------
        Net cash used in investing activities.........           (7)      (205)
                                                           --------   --------

Cash flows from financing activities:
  Proceeds from issuance of common stock and warrants, 
    net...............................................           21        831
  Repayment of capitalized lease obligations..........           --          4
                                                           --------   --------
        Net cash provided by financing activities.....           21        835
                                                           --------   --------
                        
Decrease in cash and cash equivalents.................       (1,594)      (405)

Cash and cash equivalents at beginning of period......        3,142      4,629
                                                           --------   --------
Cash and cash equivalents at end of period............     $  1,548   $  4,224
                                                           --------   --------
                                                           --------   --------


     The accompanying notes are an integral part of these condensed financial
                                      statements.
                                           
                                       5

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                                   DELTAPOINT, INC.
                                           
                       NOTES TO CONDENSED FINANCIAL STATEMENTS
                                      UNAUDITED
                                           
NOTE 1 -- THE COMPANY AND BASIS OF PRESENTATION:

     Founded in 1989, DeltaPoint, Inc. (the Company), has headquarters in 
Monterey, California, and distribution partners in the United States, Europe 
and Japan. DeltaPoint, Inc. provides developers of individual, corporate and 
commercial Web sites with advanced Web site creation and management tools 
based on database component technology.  In addition, the Company provides 
visualization software products that are designed to facilitate the 
collection, interpretation and management of business and technical 
information across multiple computing environments.
  
     The condensed financial statements should be read in conjunction with 
the audited financial statements contained in the Company's Annual Report on 
Form 10-KSB.  In the opinion of management, all adjustments, including normal 
recurring accruals, necessary for a fair presentation of the Company's 
financial position, results of operations and cash flows for the interim 
periods presented have been made. The interim results are not necessarily 
indicative of the results to be expected for the entire year.
  
     RECENT ACCOUNTING PRONOUNCEMENTS
  
     In February 1997, the Financial Accounting Standards Board issued 
Statement of Financial Accounting Standards No. 128, "Earnings per Share."  
This statement is effective for the Company's year ending December 31, 1997.  
The Statement redefines earnings per share under generally accepted 
accounting principles. Under the new standard, primary earnings per share is 
replaced by basic earnings per share and fully diluted earnings per share is 
replaced by diluted earnings per share.  If the Company had adopted this 
Statement for the three month period ended March 31, 1996 and for the three 
month period ended March 31, 1997, the Company's pro forma loss per share 
would have been as follows:
  
                                      Three Months Ended    Three Months Ended
                                        March 31, 1996         March 31, 1997
                                       -----------------     --------------
      Basic loss per share..........        ($0.79)              ($1.01)
      Diluted loss per share........        ($0.79)              ($1.01)
  
  
NOTE 2 - NOTES PAYABLE:

     On December 31, 1996, the Company issued $2,150,000 of convertible 
promissory notes payable.  The notes bear interest at 6% payable semiannually 
over their two year term.  The notes convert into Common Stock automatically 
at the end of the two year term and are convertible at the option of the 
holder with a total of 33%, 67% and 100% of the principal value of the notes 
convertible on or after March 1, March 31, and April 30, 1997, respectively. 
The conversion price of the notes is the lower of (a) 80% of the average 
closing bid price of the Company's Common Stock for the five days prior to 
notice of conversion and (b) the average offer price of the Company's Common 
Stock for the five business days prior to the notes' issuance, which is $6.70 
per share.  The Company recognized the value of the discounted conversion 
feature, or $537,000, and deferred debt issuance costs, or $262,000, as 
additional interest expense during the three months ended March 31, 1997.  
The amortization of the discounted conversion feature resulted in an increase 
to Common Stock of $537,000 during the three months ended March 31, 1997.

                                       6

<PAGE>

     NOTE 3 - NET LOSS PER SHARE:
    
     Net loss per share is computed using the weighted-average number of 
shares of common stock and common equivalent shares, when dilutive, from 
convertible promissory notes payable (using the if-converted method) and from 
stock options and warrants (using the treasury stock method).  Pursuant to 
Securities and Exchange Commission Requirements, common and common stock 
equivalent shares, options and warrants issued by the Company during the 
12-month period prior to the Company's initial public offering have been 
included in the calculation as if they were outstanding for all periods 
presented.  Due to the net loss for the three month periods ended March 31, 
1997 and 1996, the common stock equivalents were excluded from the net loss 
per share calculation because their effect was anti-dilutive.

     NOTE 4  -- SUBSEQUENT EVENTS

     In April 1997, $148,000 in principal amount of the convertible 
promissory notes payable was converted into 78,000 shares of Common Stock at 
an average conversion price of $1.90 per share.

     On April 16, 1997, the Company entered into a Letter of Intent with 
InLet Divestiture Corp. ("IDC"), InLet, Inc. ("InLet") and certain 
individuals pursuant to which the Company would purchase all of the capital 
stock of IDC, whose sole significant asset is certain software (including 
source code and related documentation).  The purchase price would be (i) 
$825,000 in cash, payable in installments, and (ii) the issuance of  260,000 
shares of the Company's Common Stock.  The Company will also pay a royalty to 
InLet in an amount equal to five percent of the net revenues from all sales, 
leases, licenses, sublicenses or other transactions pursuant to which units 
of the software product are distributed.  Half of the amount of royalties 
would be paid in the Company's Common Stock. Pending the closing of the 
purchase, the Company and IDC are negotiating an OEM agreement which would 
grant the Company the exclusive right to distribute the software product.  
The letter of intent contemplates that if the closing of the purchase does 
not occur, the OEM agreement would continue in effect.  Both parties' 
obligations to consummate the purchase are contingent upon the closing of an 
equity financing by the Company within 90 days of the date of the letter of 
intent.  Consummation of the transactions contemplated in the letter of 
intent is subject to certain additional conditions, including negotiation of 
a definitive purchase agreement and other agreements.  There can be no 
assurance that the transactions contemplated in the letter of intent will be 
consummated.

                                       7

<PAGE>


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

     THIS REPORT ON FORM 10-QSB CONTAINS FORWARD-LOOKING STATEMENTS THAT 
INVOLVE RISKS AND UNCERTAINTIES.  THE COMPANY'S ACTUAL RESULTS MAY DIFFER 
MATERIALLY FROM THE RESULTS DISCUSSED IN THE FORWARD-LOOKING STATEMENTS.  
FACTORS THAT MIGHT CAUSE SUCH A DIFFERENCE INCLUDE, BUT ARE NOT LIMITED TO, 
THOSE DISCUSSED IN "FACTORS THAT MAY AFFECT FUTURE RESULTS" BELOW, IN "RISK 
FACTORS" IN PART I OF THE COMPANY'S ANNUAL REPORT ON FORM 10-KSB AT AND FOR 
THE YEAR ENDED DECEMBER 31, 1996 AND "RISK FACTORS" IN THE COMPANY'S 
POST-EFFECTIVE AMENDMENT NO.4 TO REGISTRATION STATEMENT ON FORM SB-2 
(REGISTRATION  NO. 333-3784) AS FILED WITH THE COMMISSION ON APRIL 29, 1997. 
THE FOLLOWING DISCUSSION SHOULD BE READ IN CONJUNCTION WITH THE FINANCIAL 
STATEMENTS AND NOTES THERETO APPEARING ELSEWHERE IN THIS REPORT.

OVERVIEW

     DeltaPoint was incorporated on February 1, 1989 to design, develop and 
market visualization software products for personal computers. DeltaPoint 
commenced shipments of its initial product, DeltaGraph, at the end of 1989. 
In November 1995, the Company acquired technology required to develop 
WebAnimator, a multimedia authoring tool for the Web.  In December 1995, the 
Company acquired technology to develop QuickSite, a Web site creation and 
management tool which was released in February 1996.  The Company introduced 
WebTools in March 1996, WebAnimator in July 1996 and QuickSite Developers 
Edition in September 1996. The Company plans to incur additional expenditures 
to develop Internet software tools or new versions of existing software tools 
over the next several quarters. Although prior to 1996 the Company derived 
substantially all of its revenues from charting and graphics software 
products for desktop applications, the Company's strategy is to realize a 
significant and growing percentage of future revenues from the sale of 
Internet software tools.

     The Company's revenues consist of license revenues from sales of 
software products to distributors, resellers and end users. In addition, the 
Company derives license revenues from royalty agreements with certain 
customers. Under these agreements, the Company typically receives a large 
percentage of the aggregate revenues in the form of a nonrefundable royalty 
paid upon shipping of the master copy of software, which allows the customer 
to license a specified number of copies of the Company's software. 

     Software product sales are recognized upon shipment of the product, net 
of appropriate allowances for estimated returns. Revenues from software 
royalty agreements are recognized upon shipment of a master copy of the 
software product if no significant vendor obligations remain under the term 
of the license agreements and any amounts to be paid are nonrefundable. 
Payments received in advance of revenue recognition are recorded as deferred 
revenue. The Company grants distributors and resellers certain rights of 
return, price protection and stock rotation rights on unsold merchandise. 
Accordingly, reserves for estimated future returns and credits for price 
protection and stock rotation rights are accrued at the time of shipment. 

     The Company's gross profit has historically fluctuated from quarter to 
quarter based on the mix of revenues derived from software product sales.  
The Company's gross profit has also fluctuated based on the mix of product 
revenues derived from sales of the Company's higher-margin DeltaGraph product 
and sales of lower-margin graphics utilities and Internet products where the 
Company must pay royalties to third parties.  The Company believes these 
factors may impact its gross profit in the future.  See "Risk 
Factors--Substantial Dependence on Recent and Anticipated Product 
Introductions."

     The Company's limited operating history makes the prediction of future 
operating results difficult or impossible. Future operating results will 
depend on many factors, including the demand for the Company's products, the 
mix of revenues derived from product sales and royalty and packaging fees, 
the level of product and price competition, the Company's success in 
expanding its direct sales efforts for its software products and indirect 
distribution channels for its Internet products and the ability of the 

                                       8

<PAGE>

Company to successfully develop and market new products and control costs.  
In particular, the Company's ability to achieve revenue growth and 
profitability in the future will be significantly dependent on the timely 
introduction and market acceptance of products the Company has recently 
introduced or is developing and the ability of the Company to successfully 
develop products for new and existing markets.

     As of March 31, 1997, the Company has an accumulated deficit of 
$16,187,000. The Company expects to incur losses from operations for at least 
the next 12 months, and perhaps longer, particularly if revenues do not 
increase significantly above current levels. There can be no assurance that 
the Company will not incur significant additional losses until it 
successfully develops or acquires new products or enhancements to existing 
products that generate significant revenues and profits.  Significant 
additional equity or debt financing or a reduction in the level of operations 
or sales of assets will be required to enable the Company to continue as a 
going concern.  See "Factors That May Affect Future Results - Recent Losses; 
Accumulated Deficit and - Critical Need for Additional Capital; No Assurance 
of Future Financing."

RESULTS OF OPERATIONS

     NET REVENUES. Net revenues for the three month period ended March 31, 
1997 increased by 34.6% to $1,023,000 from $760,000 for the corresponding 
period in the prior year. The increase in revenue was primarily attributable 
to Internet products introduced after March 31, 1996. For the three month 
period ended March 31, 1997, international revenue increased to 37.3% of net 
revenues compared to 13.0% for the period ended March 31, 1996. The increase 
in international revenues was primarily due to the introduction of Internet 
products in the Japanese market. The Company's domestic and international 
sales are principally denominated in United States dollars. Movements in 
currency exchange rates did not have a material impact on the total revenue 
in the periods presented. However, there can be no assurance that future 
movements in currency exchange rates will not have a material adverse effect 
on the Company's future revenues and results of operations.

     GROSS PROFIT. Cost of revenues consists of direct materials, labor, 
overhead, freight, post customer support, royalties and contract 
manufacturing costs associated with the manufacturing of the Company's 
products.  The Company believes that these and other factors will contribute 
to the fluctuations of gross profit as a percentage of revenue.  Gross profit 
for the three month period ended March 31, 1997 increased as a percentage of 
net revenues to 68.7% from 55.5% for the corresponding period in the prior 
fiscal year. The Company's gross profit has varied quarter to quarter as a 
result of a number of factors including changes in customer and product mix, 
inventory write-offs due to new product releases, third party royalty 
obligations for the Company's Internet products and packaging revenues from 
the Company's Japanese distributor.

     SALES AND MARKETING. Sales and marketing expenses include sales 
commissions, compensation of sales and marketing personnel and cost of 
promotional activities. Sales and marketing expenses for the three month 
period ended March 31, 1997 increased to $1,459,000 or 142.6% of net revenues 
compared to $888,000 or 116.8% of revenues for the corresponding period in 
the prior year. The increase in sales and marketing expenses was primarily 
due to an increase in the use of direct mail, telemarketing, consultants, and 
channel promotions used in the continued promotion of the Company's Internet 
software tools and the activities associated with the launch of the Company's 
QuickSite 2.5 web authoring tool which is scheduled to be released in the 
second quarter of 1997. The Company expects that, if the Company obtains 
additional financing, sales and marketing expenses would increase in future 
periods because the Company would add sales and marketing personnel to 
support the anticipated introduction of  new products and updated versions of 
the Company's existing products. 

     RESEARCH AND DEVELOPMENT. Research and development expenses for the 
three month period ended March 31, 1997 increased to $731,000 or 71.5% of net 
revenues compared to $486,000 or 63.9% of revenues for the corresponding 
period in the prior year. The increase in research and development 

                                       9

<PAGE>

expenses was primarily due to a staffing increase for the development of 
QuickSite (including the custom version for IBM). In addition, the Company 
retained several consultants to aid in the development process.  The Company 
expects that, if the Company obtains additional financing, research and 
development expenses would increase in future periods due to further 
development of the Company's new products and updated and cross platform 
versions of the Company's existing products.

     GENERAL AND ADMINISTRATIVE. General and administrative expenses for the 
three month period ended March 31, 1997 decreased to $238,000 or 23.3% of net 
revenues compared to $769,000 or 101.2% of revenues for the corresponding 
period in the prior year. The decrease in general and administrative expenses 
was primarily attributable to a severance expense charge in the first quarter 
of 1996 of $505,000 relating to the departure of one of the Company's 
founders. The Company expects that, if the Company obtains additional 
financing, general and administrative expenses would increase in future 
periods to the extent that the Company expands its operations.

     INTEREST AND OTHER (EXPENSE) INCOME.  Interest and other (expense) 
income includes interest payable on the Company's convertible promissory 
notes payable, amortization of the discounted conversion feature as of the 
issuance date of the Company's convertible promissory notes payable and 
amortization of deferred costs incurred in connection with the issuance of 
such notes payable, offset by interest income earned on cash and cash 
equivalents.  Interest expense increased by $817,000 to $820,000 during the 
first quarter of fiscal 1997 from $3,000 during the comparable 1996 period.  
This increase was primarily attributable to amortization of the discounted 
conversion feature of convertible promissory notes payable and the related 
deferred issuance costs which totaled $799,000 during the quarter ended March 
31, 1997.  

     PROVISION FOR INCOME TAXES. There was no provision for taxes during the 
three month periods ended March 31, 1997 and 1996 due to net operating losses 
and the availability of net operating loss carryforwards. 

LIQUIDITY AND CAPITAL RESOURCES

     As of March 31, 1997, the Company had a working capital deficit of 
$1,464,000 and  shareholders' deficit of $922,000. The Company has financed 
its operations primarily through private and public sales of equity 
securities, borrowings under a term loan and the private sale of debt 
securities. Since inception, the Company has received $15 million in proceeds 
from private sales of preferred stock and convertible debt and from the 
Company's initial public offering of common stock. 

     The Company used net cash in operations of $1,608,000 in the three month 
period ended March 31, 1997 and $1,035,000 for the corresponding period of 
the prior year. Net cash used in 1997 consisted primarily of a net loss of 
$2,521,000 which includes interest charges totaling $799,000 relating to the 
convertible promissory notes payable amortized from the date of issuance 
through the earliest available conversion date of the notes.  Net cash used 
in  1996 consisted primarily of a net loss of $1,704,000 offset by an 
increase in accounts payable of $356,000 and the reserve returns of $231,000. 

     Net cash provided by financing activities totaled $21,000 in the three 
month period ended March 31, 1997 and $835,000 for the corresponding period 
of the prior year.  Net cash from financing activities in 1997 consisted 
primarily of the exercise of  stock options for $21,000. Net cash from 
financing activities in 1996 consisted primarily of $831,000 in net proceeds 
from the Company's overallotment from the initial public offering of common 
stock completed in 1995.

     The Company's capital expenditures related primarily to purchases of 
personal computers and computer workstations to support the Company's 
development work and other property and equipment. For the three month period 
ended March 31, 1997 the Company's capital expenditures totaled approximately 
$7,000. 

                                       10

<PAGE>

     At March 31, 1997 the Company's cash and cash equivalents was 
$1,548,000.  See "Factors That May Affect Future Results - Recent Losses; 
Accumulated Deficit and - Critical Need for Additional Capital; No Assurance 
of Future Financing." To the extent the Company continues to incur losses or 
grows in the future, its operating and investing activities will use cash 
and, consequently, such losses or growth will require the Company to obtain 
additional sources of financing. In addition, the Company's actual capital 
needs will depend upon numerous factors, including the progress of the  
Company's software development activities and the amount of cash generated 
from operations, none of which can be predicted with certainty.  There can be 
no assurance that the Company will not require additional capital sooner than 
currently anticipated.  Management is currently pursuing additional capital 
financing, although recent attempts to secure such financing on acceptable 
terms have been unsuccessful.  There can be no assurance that any additional 
required financing will be available to the Company on acceptable terms, or 
at all.  If the Company is unable to obtain additional financing, it will be 
required to reduce discretionary spending in order to maintain operations at 
a reduced level, seek a merger partner or sell assets. The inability to 
obtain required financing or reduce discretionary spending or sell assets 
would have a material adverse effect on the Company's business, financial 
condition and results of operation and would prevent the Company from 
continuing as a going concern.  See "Factors That May Affect Future Results - 
Recent Losses; Accumulated Deficit - Critical Need for Additional Capital; No 
Assurance of Future Financing."

FACTORS THAT MAY AFFECT FUTURE RESULTS

     RECENT LOSSES; ACCUMULATED DEFICIT

     The Company incurred a net loss of $2,521,000 for the three month period 
ended March 31, 1997 and had an accumulated deficit of $16,187,000 as of 
March 31, 1997.  The Company expects to incur  losses for at least the next 
12 months, and perhaps longer.  There can be no assurance that the Company 
will not incur significant additional losses until it successfully markets 
and sells existing Internet software tools or develops or acquires new 
Internet software tools or enhancements to existing Internet software tools 
that generate significant revenues.

     The Company's independent accountant's report on its financial 
statements as of and for the years ended December 31, 1996 and 1995 contains 
an explanatory paragraph indicating that the Company's accumulated deficit 
and historical operating losses raise substantial doubts about its ability to 
continue as a going concern.  The factors leading to, and the existence of, 
the explanatory paragraph may materially adversely affect the Company's 
relationship with customers and suppliers, its ability to obtain revenue and 
manufacture products and its ability to obtain financing.  Although the 
financial statements have been prepared assuming the Company will continue as 
a going concern, additional equity or debt financing or a reduction in the 
level of operations or a sale of assets will be required to enable the 
company to continue its operations. Management is currently pursuing 
additional capital financing, although recent attempts to secure such 
financing on acceptable terms have not been successful. If the Company is 
unable to obtain such financing, it will be required to seek financing from 
other sources or reduce discretionary spending or sell assets in order to 
maintain operations at a reduced level. Among other things, the Company may 
seek to raise additional financing through a corporate partnering 
relationship or by selling assets and may seek to reduce discretionary 
spending by reducing existing programs.  The accompanying financial 
statements do not include any adjustments that may result from the outcome of 
these uncertainties. 

     The Company's results of operations have historically varied 
substantially from quarter to quarter and the Company expects they will 
continue to do so. In the past, the Company's operating results have varied 
significantly as a result of a number of factors, including the size and 
timing of customer orders or license agreements, product mix, the revenues 
derived from product sales and license fees, the existence and terms of 
royalty and packaging arrangements, seasonality, the timing of the 
introduction and customer acceptance of new products or product enhancements 
by the Company's competitors, new product or

                                       11

<PAGE>

version releases by the Company, changes in pricing policies by the Company 
or its competitors, marketing and promotional expenditures, research and 
development expenditures and changes in general economic conditions. 
Furthermore, the Company has often recognized a substantial portion of its 
revenues in the last month of the quarter, with these revenues frequently 
concentrated in the last week or weeks of the quarter.

     The Company's operating and other expenses are relatively fixed in the 
short term. As a result, variations in timing of revenues can cause 
significant variations in quarterly results of operations. For example, if 
the Company obtains additional financing, the Company intends to continue to 
make significant expenditures to enhance its sales and marketing activities 
and to continue to make significant expenditures for research and development 
activities.  As such expenditures occur,  the Company may be unable to reduce 
these expenditures quickly if revenue is less than expected. The Company 
generally does not operate with a significant order backlog and a substantial 
portion of its revenue in any quarter is derived from orders booked in that 
quarter, which are difficult to forecast and which are typically concentrated 
at the end of the quarter. Accordingly, the Company's sales expectations are 
based almost entirely on its internal estimates of future demand and not on 
firm customer orders. Due to the foregoing factors, the Company believes that 
quarter to quarter comparisons of its results of operations are not 
necessarily meaningful and should not be relied upon as indications of future 
performance. In addition, there can be no assurance the Company will be 
profitable on a quarter to quarter or any other basis in the future.   See 
"Management's Discussion and Analysis of Financial Condition and Results of 
Operations" and Financial Statements."

     CRITICAL NEED FOR ADDITIONAL CAPITAL; NO ASSURANCE OF FUTURE FINANCING

     As of March 31, 1997, the Company's cash and cash equivalents was 
approximately $1,548,000. The Company's actual capital needs will depend upon 
numerous factors, including the progress of the Company's software 
development activities and the amount of revenues generated from operations, 
none of which can be predicted with certainty.  The Company has a critical 
need for additional capital.  Recent attempts to secure capital financing 
have been unsuccessful. There can be no assurance that any additional 
required financing will be available to the Company on acceptable terms, or 
at all.  The inability to obtain required financing would have a material 
adverse effect on the Company's business, financial condition and results of 
operations.  In order to continue as a going concern, the Company would be 
required to significantly reduce the level of its operations, seek a merger 
partner or sell assets. There can be no assurance that the Company would be 
able to accomplish any of such actions.  See "Management's Discussion and 
Analysis of Financial Condition and Results of Operations."

     SUBSTANTIAL DEPENDENCE ON RECENTLY INTRODUCED INTERNET SOFTWARE TOOLS

     Prior to 1996, DeltaPoint derived substantially all of its product 
revenues from licenses of DeltaGraph, its advanced charting and graphics 
software product. However, DeltaPoint's future revenue growth will continue 
to depend substantially on the successful development, introduction and 
commercial acceptance of its Internet software tools.  These consist of 
QuickSite 1.0, its web page creation and site management product introduced 
in February 1996; WebTools, its Web publishing capability tool introduced in 
March 1996; WebAnimator, its multimedia authoring tool for the World Wide 
Web, introduced in July 1996; QuickSite Developer's Edition, its enhanced 
version of QuickSite for Web site developers and corporate Intranet 
developers introduced in September 1996; and QuickSite 2.5, its updated 
version of QuickSite 1.0, which it plans to release in the second quarter of 
1997.  Commercial acceptance of the Company's Internet software tools will 
require the Company to establish additional distribution channels and sales 
and marketing methods, of which there can also be no assurance, because these 
products will be targeted to existing customers as well as to a significantly 
different potential end user population.  There can be no assurance that the 
Company can successfully manage the introduction of new versions of its 
existing Internet software tools or any other potential Internet software 
tools or that any of its existing or potential 

                                       12

<PAGE>

products will achieve significant market acceptance.  Failure of any of the 
Company's existing or potential products to achieve significant market 
acceptance will have a material adverse effect on the Company's business, 
financial condition and results of operation.

     DEPENDENCE ON INTERNET

     Sales of the Company's Internet software tools will depend in part upon 
a robust industry and infrastructure for providing Internet access and 
carrying Internet traffic. The Internet continues to be at an early stage of 
development. There can be no assurance that the infrastructure or 
complementary products necessary to make the Internet a viable commercial 
marketplace will be developed, or, if developed, that the Internet will 
become a viable commercial marketplace.  If the Internet does not become a 
viable commercial marketplace, the commercial benefits derived from the 
Company's Internet software tools would be materially adversely effected.

     RISKS ASSOCIATED WITH RETAIL DISTRIBUTION; SUBSTANTIAL CUSTOMER 
     CONCENTRATION

     DeltaPoint sells its products to distributors for resale as well as 
directly to certain retailers, including computer superstores and mass 
merchandisers. Sales to a limited number of distributors and retailers have 
constituted, and are anticipated to continue to constitute, a significant 
portion of DeltaPoint's retail software sales. In particular, revenues from 
licenses sold to Nippon Polaroid Kabushiki Kaisha, the Company's Japanese 
distributor, constituted approximately 35%, 21% and 33% of the Company's net 
revenues for the years ended December 31, 1995, 1996 and the three months 
ended March 31, 1997, respectively. Sales to Ingram constituted approximately 
13%, 30% and 12% of the Company's net revenues for the years ended December 
31, 1995, 1996 and the three months ended March 31, 1997, respectively. Any 
termination or significant disruption of DeltaPoint's relationship with any 
major distributor or retailer, or a significant reduction in sales volume 
attributable to any of such entities, could, unless or until replaced, 
materially adversely affect the Company's business, financial condition and 
results of operations. A deterioration in financial condition or other 
business difficulties of a distributor or retailer could render the Company's 
accounts receivable from such entity uncollectible, which could have a 
material adverse effect on the Company's business, financial condition and 
results of operations. There can be no assurance that DeltaPoint's existing 
distributors and retailers will continue to provide DeltaPoint's products 
with adequate levels of shelf space or promotional support. In addition, 
personal computer hardware and software companies have generally reported 
declines in gross margins and greater product returns as they have increased 
sales through the mass merchandise distribution channel. The Company expects 
that its margins will be similarly affected as it increases sales through 
this channel. 

     RISKS ASSOCIATED WITH INTERNATIONAL OPERATIONS

     The Company's revenues from international operations accounted for 
approximately 40% , 26%  and 37% of the Company's net revenues in 1995, 1996 
and the three month period ended March 31, 1997,  respectively, of which 
approximately 87%, 79% and 88% , respectively, were derived from sales in 
Japan. The Company expects that revenues from these international operations 
will continue to represent a large percentage of its net revenues. 
International revenues are subject to a number of risks, including greater 
difficulties in accounts receivable collection, longer payment cycles, 
exposure to currency fluctuations, political and economic instability and the 
burden of complying with a wide variety of foreign laws and regulatory 
requirements. The Company also believes that it is exposed to greater levels 
of software piracy in international markets because of the weaker protection 
afforded to intellectual property in some foreign jurisdictions. 

                                       13

<PAGE>


     RAPID TECHNOLOGICAL CHANGE; RISK OF PRODUCT DELAYS; RISK OF PRODUCT DEFECTS

     The markets in which the Company competes are characterized by ongoing 
technological developments, frequent new product announcements and 
introductions, evolving industry standards and changing customer 
requirements. The introduction of products embodying new technologies and the 
emergence of new industry standards and practices can render existing 
products obsolete and unmarketable. The Company's future success depends upon 
its ability on a timely basis to enhance its existing products, introduce new 
products that address the changing requirements of its customers and 
anticipate or respond to technological advances, emerging industry standards 
and practices in a timely, cost-effective manner. There can be no assurance 
that the Company will be successful in developing, introducing and marketing 
new products or enhancements to existing products or will not experience 
difficulties that could delay or prevent the successful development, 
introduction or marketing of these products, or that its new products and 
product enhancements will adequately meet the requirements of the marketplace 
and achieve any significant degree of commercial acceptance.  Software 
products such as those offered by the Company often contain errors or "bugs" 
that can adversely affect the performance of the product or damage a user's 
data. The Company has in the past discovered software defects in its products 
that have adversely affected its business and operating results. If the 
Company is unable, for technological or other reasons, to develop and 
introduce new products or enhancements of existing products in a timely 
manner or if new versions of existing products contain unacceptable levels of 
product defects or do not achieve a significant degree of market acceptance, 
or any of the above situations occur there could be a material adverse effect 
on the Company's business, financial condition and results of operations. 

     COMPETITION

     The Company competes on the basis of certain factors, including product 
quality, first-to-market product capabilities, product performance, ease of 
use, customer support and price.  The Company believes it currently competes 
favorably overall with respect to these factors.

     The markets in which the Company competes are highly competitive and 
characterized by rapid technological change, frequent new product 
introductions, short product lives, evolving industry standards and 
significant price erosion over the life of a product. The Company anticipates 
increased competition in these markets from both existing vendors and new 
market entrants. In the charting market, the Company has, to date, 
encountered competition primarily from larger vendors such as Adobe Systems 
Incorporated, Microsoft Corporation ("Microsoft"), Software Publishing 
Corporation, Lotus, Corel Corporation, and Computer Associates International, 
Inc. In the structured drawing market, the Company has, to date, encountered 
competition primarily from larger vendors such as Corel, Visio and Micrografx 
Incorporated. In the Internet software tools market, the Company has 
encountered competition primarily from Netscape Communications Corporation, 
Macromedia, Inc., Adobe Systems Incorporated, Microsoft, NetObjects and 
Quarterdeck, Inc. IBM agreed in March 1997 to acquire a majority interest in 
NebObjects.  In addition, the Company expects that existing vendors and new 
market entrants will develop products that will compete directly with the 
Company's products and that competition will increase significantly to the 
extent that markets for the Company's products grow. Increased competition is 
likely to result in price reductions, reduced gross margins and loss of 
market share, any of which could have a material adverse effect on the 
Company's business, financial condition and results of operation. Most of the 
Company's current and potential competitors have substantially greater 
financial, technical, marketing, sales and customer support resources, 
greater name recognition and larger installed customer bases than the 
Company. Because there are minimal barriers to entry into the software 
market, the Company believes sources of competition will continue to 
proliferate.  The market for the Company's products is characterized by 
significant price competition, and the Company expects it will face 
increasing pricing pressures. There can be no assurance the Company will be 
able to maintain its historic pricing structure, and an inability to do so 
would have a material adverse effect on the Company's business, financial 
condition and results of operations. If the Company is unable to compete 
effectively against current and 

                                       14

<PAGE>

future competitors, the Company's business, financial condition and results 
of operations will be materially adversely affected. 

     RELIANCE ON MICROSOFT

     Microsoft Windows has gained widespread market acceptance as the 
dominant computer operating system. Accordingly, the Company's products have 
been and it is intended that they will continue to be designed to function in 
the Microsoft Windows, Windows '95 or Windows NT environments, and the 
Company anticipates that future products will also be designed for use in 
these Microsoft environments. Because the Company expects that its 
Microsoft-based applications of these products will account for a significant 
portion of new license revenue for the foreseeable future, sales of these 
products would be materially and adversely affected by market developments 
adverse to Microsoft Windows, Windows '95 and Windows NT. The Company's 
ability to develop products using the Microsoft Windows, Windows '95 and NT 
environments is substantially dependent on its ability to gain timely access 
to, and to develop expertise in, current and future developments by 
Microsoft, of which there can be no assurance. Moreover, the abandonment by 
Microsoft of its current operating system, product line or strategy, or the 
decision by Microsoft to develop and market products that directly or 
indirectly compete with the Company's products would have a material adverse 
effect on the Company's business, financial condition and results of 
operations

     DEPENDENCE ON LIMITED NUMBER OF KEY PERSONNEL

     The Company's success depends to a significant extent upon the 
contributions of several key personnel, some of whom were only recently hired 
by the Company. The failure to attract and retain key personnel could have a 
material adverse affect on the Company's business, financial condition and 
results of operations.

     RISKS ASSOCIATED WITH MANAGING BUSINESS

     In recent years, the transition of the Company's business to Internet 
software tools has challenged, and is expected to continue to challenge, the 
Company's management and operations, including its sales, marketing, customer 
support, research and development and finance and administrative operations. 
The Company's future performance will depend in part on its ability to manage 
growth, should it occur, both in its domestic and international operations 
and to adapt its operational and financial control systems, if necessary, to 
respond to changes resulting from such growth. The Company intends to 
continue to invest in improving its financial systems and controls in 
connection with anticipated increases in the level of its operations. 
Although the Company believes that its systems and controls are adequate for 
its current level of operations, the Company anticipates that it may need to 
add additional personnel and expand and upgrade its financial systems to 
manage any future growth. The failure of the Company's management to respond 
to and manage growth effectively could have a material adverse effect on the 
Company's business, financial condition and results of operations. 

     RELIANCE ON SOLE PRODUCT ASSEMBLER

     All of the Company's software products are currently assembled by a 
related third party assembler that beneficially owns approximately 1.5% of 
the Company's Common Stock as of March 31, 1997.  Although reliance on third 
party assemblers is common in the software industry and DeltaPoint believes 
that other assemblers are available, the Company has no formal contract with 
the assembler and the termination or interruption of this assembly 
arrangement could have a material adverse effect on the Company's business, 
financial condition and results of operations until an alternate assembler is 
secured. 

                                       15
<PAGE>

     RISKS ASSOCIATED WITH PRODUCT RETURNS; PRICE PROTECTION

     Consistent with industry practice, the Company allows distributors, 
retailers and end users to return products for credits towards the purchase 
of additional products. In addition, DeltaPoint's promotional activities, 
including free trial and satisfaction guaranteed offers, and competitors' 
promotional or other activities could cause returns to increase sharply at 
any time. Further, the Company expects that the rate of product returns could 
increase to the extent that the Company introduces new versions of its 
existing products. For example, product returns may increase above historical 
levels as a result of new product introductions. In addition, if the Company 
reduces its prices, the Company credits its distributors for the difference 
between the purchase price of products remaining in their inventory and the 
Company's reduced price for such products. Although the Company provides 
allowances for anticipated returns and price protection obligations, and 
believes its existing policies have resulted in the establishment of 
allowances that are adequate and have been adequate in the past, there can be 
no assurance that such product returns and price protection obligations will 
not exceed such allowances in the future and as a result will not have a 
material adverse effect on future operating results, particularly since the 
Company seeks to continually introduce new and enhanced products and is 
likely to face increasing price competition. 

     LIMITED INTELLECTUAL PROPERTY PROTECTION

     The Company's ability to compete effectively depends in large part on 
its ability to develop and maintain proprietary aspects of its technology. 
Despite precautions taken by the Company, it may be possible for unauthorized 
third parties to copy aspects of the Company's products or to obtain and use 
information that the Company regards as proprietary. Moreover, the laws of 
some foreign countries do not protect the Company's proprietary rights in its 
products to the same extent as do the laws of the United States. The Company 
licenses its products primarily under "shrink wrap" license agreements that 
are included in products shipped by the Company and are not signed by 
licensees, therefore they may be unenforceable under the laws of certain 
jurisdictions. In addition, some aspects of the Company's products are not 
subject to intellectual property protection.

     The Company cannot be certain that others will not independently develop 
substantially equivalent or superseding proprietary technology, or that an 
equivalent product will not be marketed in competition with the Company's 
products, thereby substantially reducing the value of the Company's 
proprietary rights. There can be no assurance that any confidentiality 
agreements between the Company and its employees will provide adequate 
protection for the Company's proprietary information in the event of any 
unauthorized use or disclosure of such proprietary information. 

     Although the Company is not currently engaged in any intellectual 
property litigation or proceedings, there can be no assurance that the 
Company will not become involved in such proceedings.  An adverse outcome in 
litigation or similar adversarial proceedings could subject the Company to 
significant liabilities to third parties, require disputed rights to be 
licensed from others or require the Company to cease the marketing or use of 
certain products, any of which could have a material adverse effect on the 
Company's business, financial condition and results of operations.  The 
Company may be required to obtain licenses to patents or proprietary rights 
of others, and there can be no assurance that any licenses required under any 
patents or proprietary rights would be made available on terms acceptable to 
the Company, if at all.

     VOLATILITY OF STOCK PRICE; POSSIBLE ILLIQUIDITY OF TRADING MARKET

     The Company's stock price has exhibited substantial volatility since the 
Company's initial public offering in December 1995. The trading price of the 
Company's Common Stock could be subject to significant fluctuations in 
response to variations in quarterly operating results, changes in analysts' 
estimates, announcements of technological innovations by the Company or its 
competitors, general 

                                       16

<PAGE>

conditions in the Internet tools and  visualization software industry and 
other factors. In addition, the stock market is subject to price and volume 
fluctuations that affect the market prices for companies in general, and 
small capitalization, high technology companies in particular, and are often 
unrelated to operating performance.

     The shares of Common Stock were quoted on the Nasdaq SmallCap Market 
from December 1995 until March 18, 1997 and are traded on the Pacific Stock 
Exchange and quoted on the OTC Bulletin Board and the "pink sheets".  The 
Company was delisted from the Nasdaq SmallCap Market effective March 19, 1997 
because of Nasdaq's determination that the Company failed to maintain certain 
requirements for continued listing.  As a result, it is more difficult to 
dispose of, or to obtain accurate quotations as to the price of the Company's 
Common Stock. In addition, because the Company's Common Stock was removed 
from the Nasdaq SmallCap Market and its market price is less than $5.00 per 
share, it is subject to so-called "penny stock" rules that impose additional 
sales practice and market making requirements on broker-dealers who sell 
and/or make a market in such securities. Consequently, removal from the 
Nasdaq SmallCap Market, and the applicability of such "penny stock" rules 
could adversely affect ability or willingness of broker-dealers to sell 
and/or make a market in the Company's Common Stock and the ability of 
purchasers of the Company's Common Stock to sell their securities in the 
secondary market.

                                       17

<PAGE>

PART II. OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS. 

         There are no material pending legal proceedings against the Company.

ITEM 5.  OTHER INFORMATION 

         On April 16, 1997, the Company entered into a Letter of Intent 
         with InLet Divestiture Corp. ("IDC"), InLet, Inc. ("InLet") and 
         certain individuals pursuant to which the Company would purchase 
         all of the capital stock of IDC, whose sole significant asset is 
         certain software (including source code and related 
         documentation).  The purchase price would be (i) $825,000 in 
         cash, payable in installments, and (ii) the issuance of  260,000 
         shares of the Company's Common Stock.  The Company will also pay 
         a royalty to InLet in an amount equal to five percent of the net 
         revenues from all sales, leases, licenses, sublicenses or other 
         transactions pursuant to which units of the software product are 
         distributed.  Half of the amount of royalties would be paid in 
         the Company's Common Stock. Pending the closing of the purchase, 
         the Company and IDC are negotiating an OEM agreement which would 
         grant the Company the exclusive right to distribute the software 
         product.  The letter of intent contemplates that if the closing 
         of the purchase does not occur, the OEM agreement would continue 
         in effect. Both parties' obligations to consummate the purchase 
         are contingent upon the closing of an equity financing by the 
         Company within 90 days of the date of the letter of intent.  
         Consummation of the transactions contemplated in the letter of 
         intent is subject to certain additional conditions, including 
         negotiation of a definitive purchase agreement and other 
         agreements.  There can be no assurance that the transactions 
         contemplated in the letter of intent will be consummated.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K.

         No reports on Form 8-K were filed during the quarter ended March 31,
         1997.
         
         EXHIBITS
         
         10.28*    Offer letter dated as of March 24, 1997 between the 
                   Registrant and Jeffrey F. Ait
              
         -----------------------------------------------------------------------

         * Incorporated by reference to Registrant's Amendment No. 1 to
         Registration Statement on Form SB-2 filed April 9, 1997 (File No.
         333-22565).

                                       18

<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.

                                  DELTAPOINT, INC.


                                  By: /s/ Donald B. Witmer
                                      ------------------------------
                                      Donald B. Witmer
                                      Chief Operating Officer and
                                      Chief Financial Officer and
                                      (Principal Accounting Officer)
                                  

                                  

Date:  May 14, 1997

                                       19