<PAGE>
 
                    U.S. SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 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 July 4, 1997

        Transition report under Section 13 or 15(d) of the Securities Exchange
  ---   Act of 1934 for the transition period from _________ to ___________


                       Commission File Number: 000-21415

                           WHITE PINE SOFTWARE, INC.
          (Name of Small Business Issuer as Specified in Its Charter)

         Delaware                                           04-3151064
(State or Other Jurisdiction of                           (I.R.S. Employer
 Incorporation or Organization)                          Identification No.)

                542 Amherst Street, Nashua, New Hampshire 03063
                   (Address of Principal Executive Offices)

                                (603) 886-9050
               (Issuer'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 
                    ---     ---

The number of shares outstanding of the Registrant's common stock as of August
8, 1997 was 9,165,669.

Transitional Small Business Disclosure Format (check one):
                Yes       No  X
                   ---       ---
<PAGE>
 
                               TABLE OF CONTENTS

                        PART I.  FINANCIAL INFORMATION

<TABLE> 
<S>                                                                        <C> 
Item 1.  Financial Statements (Unaudited):

         Condensed Consolidated Balance Sheets as of July 4, 1997
         and December 31,1996..........................................      3
 
         Condensed Consolidated Statements of Operations for the 
         three and six months ended July 4, 1997 and June 30, 1996.....      4
  
         Condensed Consolidated Statements of Cash Flows for the six 
         months ended July 4, 1997 and June 30, 1996...................      5
 
         Notes to Condensed Consolidated Financial Statements..........      6
  
Item 2.  Management's Discussion and Analysis or Plan of Operation.....      9
 
                          PART II. OTHER INFORMATION
  
Item 1.  Legal Proceedings ............................................     13 
  
Item 6.  Exhibits and Reports on Form 8-K .............................     14

</TABLE> 

                                       2
<PAGE>
PART 1.  FINANCIAL INFORMATION

Item 1.  FINANCIAL STATEMENTS

                    White Pine Software, Inc. and Subsidiary
                Condensed Consolidated Balance Sheets (Unaudited)
                                 (in thousands)
<TABLE> 
<CAPTION> 
                                                              July 4,        December 31,
                                                               1997              1996
                                                           -----------       -----------
<S>                                                        <C>               <C> 
Assets
      Current assets:
          Cash and cash equivalents                         $   18,006        $   23,298
          Accounts receivable, net                               1,494             2,553
          Inventories                                              130               113
          Prepaid expenses and other current assets              1,644               450
                                                           -----------       -----------
              Total current assets                              21,274            26,414
                                                                                        
      Property and equipment, net                                1,327             1,063
      Third-party licenses, net                                    591               702
      Goodwill, net                                                795               915
      Other long-term assets                                       218               310
                                                           -----------       -----------
Total assets                                                $   24,205        $   29,404
                                                           ===========       ===========
Liabilities and stockholders' equity                                                    
      Current liabilities:                                                              
          Accounts payable and accrued expenses             $    3,103        $    2,905
          Deferred revenue                                         358               827
          Current portion of long-term debt                         41               112
                                                           -----------       -----------
              Total current liabilities                          3,502             3,844
                                                                                        
      Long term debt, net of current portion                        98               113
      Long-term portion of accrued third-party licenses            110               211
Total stockholders' equity                                      20,495            25,236
                                                           -----------       -----------
Total liabilities and stockholders' equity                  $   24,205        $   29,404
                                                           ===========       ===========
</TABLE> 

See Notes to Condensed Consolidated Financial Statements

                                       3
<PAGE>

                   White Pine Software, Inc. and Subsidiary
          Condensed Consolidated Statements of Operations (Unaudited)
                     (in thousands, except per share data)
<TABLE> 
<CAPTION> 


                                                                     Three Months Ended                     Six Months Ended
                                                              July 4, 1997       June 30, 1996      July 4, 1997      June 30, 1996
                                                               -----------        -----------        -----------        -----------
<S>                                                            <C>                <C>                <C>                <C>  
 Revenue:
       Software license fees                                   $     2,312        $     2,524        $     4,575        $     4,304
       Services and other                                              313                250                650                556
                                                               -----------        -----------        -----------        -----------
             Total revenue                                           2,625              2,774              5,225              4,860

Cost of revenue                                                        461                548              1,020                921
                                                               -----------        -----------        -----------        -----------
Gross profit                                                         2,164              2,226              4,205              3,939

Operating expenses:
       Sales and marketing                                           2,081              1,500              4,085              2,810
       Research and development                                      1,586                877              3,247              1,701
       General and administrative                                      603                796              1,554              1,283
       Restructuring                                                   661                -                  661                  -
                                                               -----------        -----------        -----------        -----------
             Total operating expenses                                4,931              3,173              9,547              5,794
                                                               -----------        -----------        -----------        -----------

Loss from operations                                                (2,767)              (947)            (5,342)            (1,855)

Other income, net                                                      279                 51                513                 23
                                                               -----------        -----------        -----------        -----------

Loss before provision for income taxes                              (2,488)              (896)            (4,829)            (1,832)
Provision for income taxes                                             -                   30                -                   56
                                                               -----------        -----------        -----------        -----------
Net loss                                                       ($    2,488)       ($      926)       ($    4,829)       ($    1,888)
                                                               ===========        ===========        ===========        ===========


Net loss per common and common                                 ($     0.27)       ($     0.16)       ($     0.53)       ($     0.32)
                                                               ===========        ===========        ===========        ===========
       equivalent share

Weighted average number of common and common
       equivalent shares outstanding                             9,096,989          5,901,982          9,077,046          5,901,050
                                                               ===========        ===========        ===========        ===========
</TABLE> 

See Notes to Condensed Consolidated Financial Statements




                                       4
<PAGE>
                   White Pine Software, Inc. and Subsidiary
         Condensed  Consolidated Statements of Cash Flows (Unaudited)
                                (in thousands)

<TABLE> 
<CAPTION> 
                                                                                                   Six Months     Six Months
                                                                                                      Ended          Ended
                                                                                                   July 4, 1997  June 30, 1996
                                                                                                   -----------     ----------  
<S>                                                                                                <C>             <C>  
Operating activities                                                                            
Net loss                                                                                           $    (4,829)    $   (1,888)
Adjustments to reconcile net loss to net cash used in operating activities:                     
       Depreciation                                                                                        219            204
       Amortization of goodwill and third-party licenses                                                   380            372
       Provision for bad debts                                                                              46              9
       Changes in operating assets and liabilities:                                             
             Accounts receivable                                                                           986           (252)
             Inventories                                                                                   (20)            36
             Prepaid expenses                                                                           (1,062)          (291)
             Other assets                                                                                  (59)           (88)
             Accounts payable                                                                              294             71
             Accrued expenses and other accrued liabilities                                               (556)          (208)
             Accrued restructuring liability                                                               529              -
             Deferred revenue                                                                             (457)           458
                                                                                                   -----------     ----------  
Net cash used in operating activities                                                                   (4,529)        (1,577)
                                                                                                
Investing activities                                                                            
Purchase of property and equipment, net                                                                   (504)          (303)
Purchase of third-party licenses, net                                                                     (149)           (30)
                                                                                                   -----------     ----------  
Net cash used in investing activities                                                                     (653)          (333)
                                                                                                
Financing activities                                                                            
Proceeds from long-term debt                                                                                 -             23
Principal payments on long-term debt                                                                      (168)           (96)
Proceeds from common stock issued at $5.83 par value stock redeemable as $.01 par value stock                -          2,239
Proceeds from common stock issued upon exercise of stock options                                            88              -
                                                                                                   -----------     ----------  
Net cash provided by (used in) financing activities                                                        (80)         2,166
                                                                                                
Currency translation effect on cash and cash equivalents                                                   (30)             1
                                                                                                   -----------     ----------  
Net increase (decrease) in cash and cash equivalents                                                    (5,292)           257
Cash and cash equivalents at beginning of period                                                        23,298          1,774
                                                                                                   -----------     ----------  
Cash and cash equivalents at end of period                                                         $    18,006     $    2,031
                                                                                                   ===========     ==========  
</TABLE> 

See Notes to Condensed Consolidated Financial Statements

                                       5

<PAGE>
 
                   WHITE PINE SOFTWARE, INC. AND SUBSIDIARY
       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
                                 July 4, 1997

1.   Basis of Presentation

The unaudited condensed consolidated financial statements included herein have
been prepared by White Pine Software, Inc. (the "Company") pursuant to the rules
and regulations of the Securities and Exchange Commission (the "Commission").
Certain information and footnote disclosures normally included in the financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to such rules and regulations. The
Company believes, however, that the disclosures made are adequate to make the
information not misleading. It is suggested that these financial statements be
read in conjunction with the condensed consolidated financial statements and
notes thereto, together with the related information set forth under
"Management's Discussion and Analysis or Plan of Operation," contained in the
Company's Annual Report on Form 10-KSB for the fiscal year ended December 31,
1996 filed with the Commission.

Description of Business

The Company develops, markets and supports multiplatform desktop multimedia
software that facilitates worldwide video and audio communication and data
collaboration across the Internet, intranets and other networks that use the
Internet Protocol ("IP"). The Company's desktop videoconferencing software
products allow users to participate in real-time, multipoint videoconferences
over the Internet and intranets. The Company recently introduced WebTerm
Toolbox, which allows users to access host applications and data/information
from within the browser, as a new suite of products geared to providing Advanced
Intranet Solutions to corporations, educational organizations, and government
agencies. The Company also offers desktop X Windows and terminal emulation
software. The Company's customers include businesses, government organizations,
educational institutions and individual consumers. The Company markets and sells
its products in the United States, Europe, and the Pacific Rim through
distributors, a combination of strategic partners and OEMs, and its direct sales
organization, as well as over the Internet. The Company, formerly known as
Visual International, Inc., was incorporated in April 1992.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and
its wholly-owned foreign subsidiary, About Software Corporation S.A. (ASC), and
ASC's wholly-owned subsidiary. All significant intercompany accounts and
transactions have been eliminated in consolidation.

The condensed consolidated financial statements at and for the periods ended
July 4, 1997 and June 30, 1996 are unaudited and include all adjustments which
are, in the opinion of management, necessary for a fair presentation of the
financial position and operating results for the interim periods. The results of
operations for the six months ended July 4, 1997 are not necessarily indicative
of results for the entire year.

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.

Fiscal Year

Effective January 1, 1997, the Company changed its interim fiscal reporting
periods from calendar quarters to quarters consisting of thirteen weeks.

                                       6
<PAGE>
 
Cash and Cash Equivalents

Cash and cash equivalents consist of cash on hand and investments in high grade
commercial paper having maturities of three months or less when purchased.
Commercial paper qualifying as cash equivalents totaled $17,020,000 and
$22,440,000 at July 4, 1997 and December 31, 1996, respectively. These
investments have been categorized as held to maturity under the provisions of
Statement of Financial Accounting Standards No. 115, Accounting for Certain
Investments in Debt and Equity Securities. Accordingly, the balances are stated
at amortized cost, which approximates fair value, because of the short maturity
of these instruments.

Revenue Recognition

The Company's revenue is derived from software license fees and fees for
services related to its software products, primarily software maintenance fees.
The Company recognizes revenue in accordance with the provisions of AICPA
Statement of Position No. 91-1, Software Revenue Recognition.

Software license revenue is recognized upon receipt of a firm customer order and
shipment of the software, net of allowances for estimated future returns,
provided that no significant obligations remain on the part of the Company and
collection of the related receivable is deemed probable. Revenue under certain
license agreements is recognized upon execution of a signed contract and
fulfillment of the contractual obligations, provided that no significant
obligations remain on the part of the Company and collection is deemed probable.

Software maintenance fees, which are generally payable in advance and are non-
refundable, are recognized ratably over the period of the maintenance contract,
typically twelve months. Revenue from training and consulting services is
recognized as services are provided.

Software license fees, consulting fees, and training fees that have been prepaid
or invoiced but that do not yet qualify for recognition as revenue under the
Company's policy, and prepaid maintenance fees not yet recognized as revenue,
are reflected as deferred revenue.

Capitalized Software

Statement of Financial Accounting Standards No. 86, Accounting for the Costs of
Computer Software to be Sold, Leased or Otherwise Marketed, requires
capitalization of certain software development costs subsequent to the
establishment of technological feasibility. Based upon the Company's product
development process, technological feasibility is established upon completion of
a commercially viable working model. Costs incurred by the Company between
completion of the commercially viable working model and the point at which the
product is ready for general release have been capitalized.

Foreign Currency Translation

The financial statements of the Company's foreign subsidiary have been
translated into U.S. dollars in accordance with Statement of Financial
Accounting Standards No. 52, Foreign Currency Translation. All balance sheet
amounts have been translated using the exchange rates in effect at the balance
sheet date. Statement of operations amounts have been translated using average
exchange rates. The gains and losses resulting from the changes in exchange
rates from the date of acquisition of ASC to July 4, 1997 have been reported
separately as a component of stockholders' equity.

The aggregate transaction gains and losses were insignificant for all periods
presented.

Loss Per Common and Common Equivalent Share

Net loss per common and common equivalent share is computed using the weighted
average number of shares of common stock and dilutive common equivalent shares
outstanding during the period. All shares, options, and warrants issued during
the 12-month period prior to the Company's initial public offering consummated
on October 17, 1996 have been included in the calculation as if they were
outstanding for the fiscal quarter ended June 30, 

                                       7
<PAGE>
 
1996, using the treasury stock method. Common equivalent shares consist of the
incremental common shares issuable upon the exercise of stock options and
warrants using the treasury stock method.

In February 1997, the Financial Accounting Standards Board issued SFAS No. 128,
Earnings per Share. SFAS No. 128 addresses the simplification of calculating
earnings per share (EPS) and makes it comparable to international EPS standards.
It is effective for financial statements for periods ended after December 15,
1997. Early adoption is not permitted; however, prior period EPS amounts will be
required to be restated to conform to the provisions of the Statement. The
Company's adoption of SFAS No. 128 is not expected to have a material impact on
its financial statements.

Restructuring Charge

In the fiscal quarter ended July 4, 1997, the Company reorganized its operations
and recorded a restructuring charge in the amount of $661,000 as a result of a
change in senior management and a reduction in its workforce.  This amount
consisted primarily of severance payments, outplacement expenses, and related
fees for 26 employees who were laid off at the quarter end.  The reorganization
reflects the Company's decision to focus its resources on its web-based
conferencing and connectivity products, and to terminate support, development,
and sales of certain older product lines.

                                       8
<PAGE>
 
Item 2.  Management's Discussion and Analysis or Plan of Operation

This Quarterly Report on Form 10-QSB of White Pine Software, Inc. (the
"Company") contains forward-looking statements within the meaning of Section 27A
of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of
1934. THE COMPANY'S ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THE RESULTS
CONTEMPLATED IN THE FORWARD-LOOKING STATEMENTS AS A RESULT OF A NUMBER OF
FACTORS, INCLUDING CHANGES IN THE COMPANY'S MANAGEMENT DURING THE LAST YEAR, THE
COMPANY'S DEPENDENCE ON ONE OR MORE CUSTOMERS FOR A SIGNIFICANT PORTION OF ITS
REVENUES, AND SIGNIFICANT AND INCREASING COMPETITION IN THE MARKETS FOR CERTAIN
OF THE COMPANY'S PRODUCTS AND SERVICES. CERTAIN OF THESE FACTORS ARE DESCRIBED
UNDER "ITEM 1A. Risk Factors" IN THE COMPANY'S ANNUAL REPORT ON FORM 10-KSB FOR
THE FISCAL YEAR ENDING DECEMBER 31, 1996, WHICH ITEM IS FILED AS AN EXHIBIT TO
THIS QUARTERLY REPORT AND INCORPORATED HEREIN BY REFERENCE.

EXODUS, MEETINGPOINT, WEBTERM, WHITE PINE and 5PM TERM are trademarks of the
Company.  CU-SEEME is a registered trademark of Cornell Research Foundation,
Inc. All other trademarks referred to in this Quarterly Report are the property
of their respective owners.

Overview.  The Company develops, markets and supports multiplatform desktop
--------
multimedia software that facilitates worldwide video and audio communication and
data collaboration across the Internet, intranets and other networks that use
the Internet Protocol ("IP"). The Company's desktop videoconferencing software
products, CU-SeeMe and the White Pine Reflector, create a client-server solution
that allows users to participate in real-time, multipoint videoconferences over
the Internet and intranets. The Company recently introduced WebTerm Toolbox,
which allows users to access host applications from within the browser, as a new
suite of products geared to providing Advanced Intranet Solutions to
corporations, educational organizations and government agencies. The Company
also offers its eXodus line of desktop X Windows software, which enables
seamless interoperability between local and remote environments, and its 5PM
line of terminal emulation software, which provides desktop access to data and
applications residing on enterprise legacy systems.

In June 1995, as a part of its continuing plan to focus on software connectivity
products, the Company entered into the License Agreement with the Cornell
Research Foundation, Inc. (the "Foundation"), which granted to the Company the
exclusive worldwide right to develop, modify, market, distribute and sublicense
commercial versions of Freeware CU-SeeMe and its related software-only
multipoint conferencing server. The Company commenced shipments of the initial
commercial versions of its Enhanced CU-SeeMe and the White Pine Reflector in
March 1996 and May 1996, respectively. The Company anticipates that its revenue
growth, if any, will depend on increased sales of CU-SeeMe and the White Pine
Reflector and on sales of its next generation CU-SeeMe client and MeetingPoint
multimedia server for the Internet and intranets. Accordingly, the Company
intends to devote a substantial portion of its research and development and
sales and marketing resources to technologies related to videoconferencing.

The Company's revenue is derived from software license fees and fees for
services related to its software products, primarily software maintenance fees.
The Company recognizes revenue in accordance with the American Institute of
Certified Public Accountants Statement of Position No. 91-1, Software Revenue
Recognition.  Software license revenue is recognized upon execution of a
contract or purchase order and shipment of the software, net of allowances for
estimated future returns, provided that no significant obligations on the part
of the Company remain outstanding and collection of the related receivable is
deemed probable by management. An allowance for product returns is recorded by
the Company at the time of sale and is measured periodically to adjust to
changing circumstances, including changes in retail sales. Software maintenance
fees, which are generally payable in advance and are non-refundable, are
recognized ratably over the period of the maintenance contract, typically twelve
months.

Revenue from training and consulting services is recognized as services are
provided. Software license fees, consulting fees and training fees that have
been prepaid or invoiced but that do not yet qualify for recognition as revenue
under the Company's policy, and prepaid maintenance fees not yet recognized as
revenue, are reflected as deferred revenue.

                                       9
<PAGE>
 
Effective January 1, 1997, the Company changed its interim fiscal reporting
periods from calendar quarters to quarters consisting of thirteen weeks.

On May 22, 1997, the Company renegotiated the terms of its License Agreement
with the Foundation.  The principle changes to the agreement were a $1,000,000
prepayment of royalties by the Company to the Foundation, and a decrease in the
level of royalties based on revenue.  The renegotiated terms are retroactive to
January 1, 1997.

The Company is still subject to certain minimum royalty payments.

Results of Operations.  The following table sets forth line items from the
---------------------
Company's statement of operations as percentages of total revenue for the three
and six months ended July 4, 1997 and June 30, 1996.
<TABLE> 
<CAPTION> 
                                     Three months ended       Six months ended
                                   ----------------------   --------------------
                                     July 4,    June 30,     July 4,   June 30,
                                       1997        1996        1997       1996
                                   ----------------------   --------------------
<S>                                 <C>         <C>          <C>       <C> 
Revenue:   
   Software license fees               88.1%       91.0%       87.6%     88.6% 
   Services and other                  11.9         9.0        12.4      11.4   
                                   ----------------------   --------------------
      Total revenue                   100.0       100.0       100.0     100.0

Cost of revenue                        17.6        19.7        19.5      18.9
                                   ----------------------   --------------------
Gross profit                           82.4        80.3        80.5      81.1

Operating expenses:
   Sales and marketing                 79.2        54.1        78.3      57.8
   Research and development            60.4        31.6        62.1      35.0
   General and administrative          23.0        28.7        29.7      26.5  
   Restructuring                       25.2        --          12.6      --  
                                   ----------------------   --------------------
      Total operating expenses        187.8       114.4       182.7     119.3  

Loss from operations                 (105.4)      (34.1)     (102.2)    (38.2) 
Interest income and other, net         10.6         1.8         9.8        .5
Provision for income taxes              0.0         1.1         0.0       1.1 
                                   ----------------------   --------------------
Net loss                              (94.8)%     (33.4)%     (92.4)%   (38.8)%
                                      =======     =======     =======   =======
</TABLE> 

Revenue. Total revenue decreased by 5% to $2,625,000 in the quarter ended July
-------
4, 1997 from $2,774,000 in the quarter ended June 30, 1996. Total revenue
increased by 8% to $5,225,000 in the six months ended July 4, 1997 from
$4,860,000 in the six months ended June 30, 1996. The changes in total revenue
reflect the combination of increased revenues generated from CU-SeeMe since its
introduction in March 1996 offset by decreasing text emulator and eXodus X-
server product revenues. CU-SeeMe and Reflector revenue increased 165% to
$2,837,000 in the six months ended July 4, 1997 from $1,072,000 in the
comparable period in the prior year. Emulator revenues decreased 53% to $676,000
in the six months ended July 4, 1997 from $1,429,000 in the six months ended
June 30, 1996. Total revenue for the six-month period ended July 4, 1997 was
adversely affected by a delay in the initial shipping of CU-SeeMe 3.0, which
began shipping late in the second quarter. In addition, sales of the recently
introduced WebTerm products were lower than expected, as a result of longer than
anticipated sales cycles.

Revenue from sales outside the United States comprised 28% and 31% of total
revenue for the quarters ended July 4, 1997 and June 30, 1996, respectively.
Revenue from sales outside the United States comprised 29% and 32% of total
revenue for the six month periods ended July 4, 1997 and June 30, 1996,
respectively.  The decrease in the 

                                       10
<PAGE>
 
percentage of revenue from sales outside the United States was principally due
to a 14% decrease in sales in Europe to $892,000, partially offset by a 28%
increase in sales to $524,000 in the Asia Pacific region for the six month
period ended July 4, 1997.

Cost of Revenue.  Cost of revenue consists principally of costs of product
---------------
media, manuals, packaging materials, product localization for international
markets, duplication and shipping, as well as royalties and associated
amortization of paid license fees relating to third-party software included in
the Company's products.

Cost of revenue as a percentage of total revenue decreased to 18% for the
quarter ended July 4, 1997 from 20% for the quarter ended June 30, 1996. The
percentage decrease resulted primarily from the reduced royalty payments under
the revised License Agreement with the Cornell Research Foundation, Inc.

Certain third-party software incorporated within CU-SeeMe bears higher royalty
rates than the software  incorporated in the Company's other product lines and
also requires payment of upfront fees that are amortized over the respective
periods of the software licenses. The Company intends to continue its strategy
of improving the features and functionality of its products, particularly CU-
SeeMe, through the incorporation of third-party software and industry standards
and, as a result, the cost of revenue as a percentage of total revenue may
continue to fluctuate.

Sales and Marketing.  Sales and marketing expense consists primarily of costs
-------------------
associated with sales and marketing personnel, sales commissions, trade shows,
advertising and promotional materials. Sales and marketing expense increased by
39% to $2,081,000 in the quarter ended July 4, 1997 and by 45% to $4,085,000 in
the six months ended July 4, 1997, as compared to the respective periods in the
prior year.  Sales and marketing expense  increased as a percentage of total
revenue to 79% in the quarter ended July 4, 1997 from 54% in the quarter ended
June 30, 1996.  Total sales and marketing expense increased as a percentage of
total revenue to 78% in the six months ended July 4, 1997 from 58% in the
comparable period for the prior year.

The dollar and percentage increases in sales and marketing expense for the
quarter ended July 4, 1997 were attributable primarily to the hiring of
additional sales and marketing personnel in channel development, marketing
communication, technical support and sales, as well as increased trade show
activity in the quarter ended July 4, 1997.

Research and Development.  Research and development expense consists primarily
------------------------
of costs of personnel and equipment. Research and development expense increased
by 81% to $1,586,000 in the quarter ended July 4, 1997 from $877,000 in the
quarter ended June 30, 1996.   Research and development expense increased 91% to
$3,247,000 in the six month period ended July 4, 1997 from $1,701,000 in the
same period in the prior year.  Total research and development expense
represented 60% and 32% of total revenue for the quarters ended July 4, 1997 and
June 30, 1996, respectively, and represented 62% and 35% of total revenue for
the six months ended July 4,1997 and June 30, 1996, respectively.

The dollar and percentage increases in research and development expenses for
both the quarter and six months ended July 4, 1997 were predominantly due to the
hiring of additional personnel for the MeetingPoint product development team
and, to a lesser extent, expenses associated with the utilization of contracted
engineering services.

General and Administrative.  General and administrative expense consists of
--------------------------
administrative, financial and general management activities, including legal,
accounting and other professional fees. General and administrative expense
decreased by 24% and increased 21% in the three and six months ended July 4,
1997, respectively, from $796,000 and $1,283,000 in the three and six months
ended June 30, 1996, respectively. General and administrative expense decreased
as a percentage of total revenue to 23% in the quarter ended July 4, 1997 from
29% in the same quarter in the prior year. General and administrative expense
increased as a percentage of total revenue to 30% from 26% in the six month
periods ended July 4, 1997 and June 30, 1996, respectively.

The dollar and percentage decreases in general and administrative expenses for
the quarter ended July 4, 1997 were attributable primarily to legal, audit, and
investor relations expenses in the quarter ended June 30, 1996, incurred prior
to the Company's public offering in October 1996. The dollar and percentage
increases in general

                                       11
<PAGE>
 
and administrative expenses for the six months ended July 4, 1997 were due
predominantly to increased headcount and legal fees attributable to the
Company's transition from a private to a publicly held company.

Restructuring Charge. In the quarter ended July 4, 1997, the Company reorganized
--------------------
its operations and recorded a restructuring charge in the amount of $661,000 as
a result of a change in senior management and a reduction in its workforce. This
amount consisted primarily of severance payments, outplacement expenses, and
related fees for 26 employees who were laid off at the quarter end. The
reorganization reflects the Company's decision to focus its resources on its 
web-based conferencing and connectivity products, and to terminate support,
development, and sales of certain older product lines. These discontinued
product lines include TGraf terminal emulators, and Communication Tools for
Macintosh such as Mac320 and FTPcs.

The Company will incur a cash outlay of nearly $500,000 in the next two quarters
resulting from the charge.

Provision for Income Taxes.  The Company's provision for income taxes consists
--------------------------
of federal alternative minimum taxes and state and foreign income taxes. The
Company expects that its effective tax rate for the foreseeable future will be
lower than the combined federal and state statutory rate primarily as a result
of the realization of net operating loss carryforwards.

                                       12
<PAGE>
 
                          PART II.  OTHER INFORMATION

Item 1.  Legal Proceedings

The Company is a defendant in 8 lawsuits pending in New York federal and state
courts (the "RSI Suits") in which the plaintiffs claim to suffer from carpal
tunnel syndrome, or "repetitive stress injuries," as a result of having used
computer keyboards (the "Keyboards") that are alleged to have been defectively
designed. The Keyboards were supplied, and possibly designed and manufactured,
by Ontel Corporation. The assets of Ontel Corporation were purchased in 1982 by
Visual Technology, Inc. ("Visual"), a predecessor of Visual T.I., Inc. ("VTI"),
which in turn is a predecessor of the Company. The RSI Suits, which seek money
damages, were brought from February 1992 to June 1996 by employees of New York
Telephone, which purchased the Keyboards from Lockheed Electronics Corporation.
One or more of Visual, Ontel Corporation, Lockheed Electronics Corporation and
Key Tronics Corporation, a subcontractor for certain of the Keyboards, are named
as co-defendants in certain of the RSI Suits. New York Telephone employees have
also commenced 38 suits that name as defendants only Visual and/or Ontel
Corporation. The Company could be named as a defendant in these cases. None of
the RSI Suits has reached trial and additional information detrimental to the
Company could be developed in the course of discovery.

In May 1993, VTI's product liability coverage terminated. Certain of the RSI
Suits appear to be based on claims that allegedly arose after May 1993, and
therefore may be uninsured. The insurers for VTI, the Company and others (the
"Insurers") are defending the RSI Suits under a reservation of rights. To date,
the Company's proportionate share of the defense costs of the RSI Suits has not
been material. There can be no assurance, however, that the Company will not
incur material legal expenses defending the RSI Suits. The Company has a reserve
of approximately $291,000 in connection with the RSI Suits, based upon the
Company's belief that (i) certain of the RSI Suits are covered by product
liability insurance, (ii) the Company is contractually indemnified by Lockheed
Electronics Corporation and/or Key Tronics Corporation against all or a portion
of the damages to which the Company may be subject and (iii) the Company has
defenses to substantially all of the claims under the RSI Suits. Although the
Company believes that its reserve for the RSI Suits is adequate, there can be no
assurance that the Company's liabilities under the RSI Suits will not
substantially exceed that reserve. New York Telephone and others may continue to
use certain of the Keyboards and, accordingly, there can be no assurance that
additional product liability claims will not be asserted against the Company in
the future.

From time to time, the Company has received and may receive in the future notice
of claims of infringement of other parties' proprietary rights. Although the
Company believes that its products and technology do not infringe the
proprietary rights of others, there can be no assurance that additional third
parties will not assert infringement and other claims against the Company or
that any infringement claims will not be successful.

From time to time, the Company may be exposed to litigation arising out of its
products, services and operations. As of the date of filing of this Quarterly
Report on Form 10-QSB, the Company is not engaged in any legal proceedings of a
material nature, other than the RSI Suits.

                                       13
<PAGE>
 
Item 6.  Exhibits and Reports on Form 8-K

         (a)  Exhibits
 
              Exhibit No.      Description
              ----------       -----------

              11.1             Statement re computation of per share earnings

              27.1             Financial Data Schedule for fiscal quarter ended
                               July 4, 1997

              99.1             Risk Factors as excerpted from pages 17 to 28 of
                               the Company's Annual Report on Form 10-KSB for
                               the fiscal year ended December 31, 1996

         (b)  Reports on Form 8-K

              None.

                                       14
<PAGE>
 
                                  SIGNATURES

In accordance with the requirements of the Securities Exchange Act of 1934, the
Registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized, as of August 18, 1997.

                                            WHITE PINE SOFTWARE, INC.


                                            By: /s/ KILLKO A. CABALLERO
                                               ---------------------------------
                                               Killko A. Caballero
                                               President and Director



                                            By: /s/ CHRISTINE J. COX
                                               ---------------------------------
                                               Christine J. Cox
                                               Vice President - Finance and
                                               Principal Financial and 
                                               Accounting Officer

                                       15