##### 









UNITED STATES SECURITIES AND EXCHANGE
COMMISSION

Washington, D.C. 20549




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Form 10-K/A

(Amendment No. 1)


|                                                |  |                                                                                                 
|----------------------------------------------- |  | ------------------------------------------------------------------------------------------------
|(Mark One)                                      |  |                                                                                                 
|þ                                               |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR
    15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934    
|                                               
|For the fiscal year ended December 31,
    2003
|                                               
|or                                             
|                                               
|o                                               |  | TRANSITION REPORT PURSUANT TO SECTION 13
    OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934
|                                               
|For the transition period
    from           to

Commission file number: 0-27168



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Viewpoint Corporation

(Exact name of registrant as specified in its
charter)


|                                                                   |  |                                         
|------------------------------------------------------------------ |  | ----------------------------------------
|Delaware                                                           |  | 95-4102687                              
|(State or other jurisdiction of
    incorporation or organization) |  | (I.R.S. Employer
    Identification No.)

498 Seventh Avenue, Suite 1810,
New York, NY 10018

(Address of principal executive offices and
zip code)


(212) 201-0800

(Registrants telephone number, including
area code)




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Securities registered pursuant to
Section 12(b) of the Act:

None


Securities registered pursuant to
Section 12(g) of the Act:

Common Stock, $0.001 par value


Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period
that the registrant was required to file reports), and
(2) has been subject to such filing requirements for the
past
90 days.     Yes þ          No o

Indicate by check mark if disclosure of
delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein and will not be
contained, to the best of Registrants knowledge, in
definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any
amendment to the
Form 10-K.     o

Indicate by check mark whether the registrant is
an accelerated filer (as defined in Exchange Act Rule 12b-2
of the
Act)     Yes o          No þ

|                                                                                                        |  |   |            | 
|------------------------------------------------------------------------------------------------------- |  | - | ---------- | 
|Aggregate market value of voting stock held by
    non-affiliates of the registrant as of June 30, 2003 |  | $ | 54,263,000 | 
|Number of shares of common stock outstanding as
    of April 27, 2004                                   |  |   | 52,348,298 | 

DOCUMENTS INCORPORATED BY REFERENCE:
None



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TABLE OF CONTENTS

|                 |  |                                                                      |   |      |    | 
|---------------- |  | -------------------------------------------------------------------- | - | ---- | -- | 
|                 |  |                                                                      |   | Page
|                 |  |                                                                      |   |     
|EXPLANATORY NOTE |  |                                                                      | 2 |     
|PART III        
|Item 10.         |  | Directors and Executive
    Officers of the Registrant               |   |      | 3  | 
|Item 11.         |  | Executive Compensation                                               |   |      | 5  | 
|Item 12.         |  | Security Ownership of
    Certain Beneficial Owners and Management   |   |      | 10 | 
|Item 13.         |  | Certain Relationships and
    Related Transactions                   |   |      | 12 | 
|Item 14.         |  | Principal Accountant Fees
    and Services                           |   |      | 12 | 
|PART IV         
|Item 15.         |  | Exhibits, Financial
    Statement Schedules, and Reports on Form 8-K |   |      | 13 | 
|Signatures       |  |                                                                      |   |      | 14 | 

1



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##### 



EXPLANATORY NOTE

This Amendment No. 1 on Form 10-K/ A is
being filed by Viewpoint Corporation (the Company)
as an amendment to its Annual Report on Form 10-K for the
fiscal year ended December 31, 2003 to amend and restate in
its entirety Part III, Items 11-14. The reference on the cover
page of the originally filed Report to the incorporation by
reference of the registrants Proxy Statement relating to
its annual meeting of stockholders to be held in 2004 is also
deleted. Except as otherwise stated herein, no other information
contained in the original Report has been updated by this
Amendment No. 1.

2



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##### 



PART III




Item 10. Directors and Executive Officers
of the Registrant

The following table sets forth information about
our directors and executive officers:

|                    |  |     |    |          |  |                                        
|------------------- |  | --- | -- | -------- |  | ---------------------------------------
|Name                |  | Age |    | Position
|                    |  |     |    |         
|Jerry S. Amato      |  |     | 44 |          |  | President, Chief Executive Officer     
|Tommy Bennett       |  |     | 48 |          |  | Director                               
|James Crabbe        |  |     | 58 |          |  | Director                               
|Stephen Duff        |  |     | 40 |          |  | Director                               
|Samuel H. Jones     |  |     | 70 |          |  | Director                               
|Dennis Raney        |  |     | 61 |          |  | Director                               
|Robert E. Rice      |  |     | 49 |          |  | Executive Chairman of the Board        
|William H. Mitchell |  |     | 46 |          |  | Chief Financial Officer                
|Brian ODonoghue    |  |     | 40 |          |  | Senior Vice President  General Counsel

There is no family relationship among any
directors or executive officers of the Company.

Directors of the Company

Jerry S. Amatohas been a Director of the Company
and its Chief Executive Officer since August 2003. From July
1995 through September 1998, Mr. Amato served as President
and Chief Operating Officer of Vanstar Corporation, a leading
provider of services and products designed to build, manage and
enhance personal computer network infrastructures with 1998
revenues exceeding $2.8 billion. From September 1998 until
joining the Company in August 2003, Mr. Amato served as a
principal of the Flatiron Group in New York, a business strategy
and planning advisory service. In March 1998, Mr. Amato led
the formation of Technology Access Action Coalition/ ACT, a
Washington-based organization promoting innovation and growth in
the technology sector, and served as its Chairman until November
1999.

Thomas Bennetthas been a Director of the Company
since November 2000. He has been with Computer Associates
International, Inc. since 1988 and has been serving as its
Senior Vice President of Business Development since April 1997.
On February 8, 2000, he became a director of Metastream
Corporation, a subsidiary of the Company, from Metastreams
formation in June 1999 until its merger with the Company in
November 2000.

James E. Crabbebecame a Director of the Company
in March 2003. Mr. Crabbe served as President of the Crabbe
Huson Group, Inc., a registered investment advisor, from 1980
until the time of its sale to Liberty Financial Services, Inc.
in 1998. Crabbe Huson had over $5.5 billion in assets under
management at the time of its sale to Liberty Financial.
Mr. Crabbe remained an employee of Liberty until 2000.
Mr. Crabbe is currently chairman of the board of directors
of VendingData Corporation, a company in the business of
designing and manufacturing machines used in the gambling
industry.

Stephen M. Duffbecame a Director of the Company
in May 2003. Mr. Duff is the Chief Investment Officer of
The Clark Estates, Inc. Prior to joining The Clark Estates in
1995, Mr. Duff was a Vice President of The Portfolio Group,
a subsidiary of the Chemical Banking Corporation. Mr. Duff
is a 1985 graduate of Stonehill College. Currently he serves on
two other public company boards, The Casual Male Retail Group,
Inc. and Easylink Services Corporation, Inc. Mr. Duff also
serves on the Board of the Clara Welch Thanksgiving Home, Inc.,
a non-profit elderly care facility in Cooperstown, New York.

Samuel H. Jones, Jr.has been a Director of the Company
since April 1992. He has been President of S-J Venture Capital
Company since 1991. Mr. Jones founded S-J Transportation
Company, an industrial waste transportation company, in 1971 and
served as its President until 2002. Mr. Jones is a director
of Fulton Financial Corp.

Dennis R. Raneyjoined Viewpoints Board of
Directors in February 2004. Mr. Raney served as Chief Financial
Officer at eOne Global from 2001 to 2003. Prior to that
position, he was Executive Vice President and Chief Financial
Officer at Novell Incorporated from 1998 to 2001. He began his
career at Hewlett-Packard in 1970 where he rose through the
ranks to become Chief Financial Officer for Intercontinental

3



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##### 



Operations and then European Operations, based in
various locations including Singapore and Geneva. Following
Hewlett-Packard, he was Chief Financial Officer for
Bristol-Myers Squibbs Pharmaceutical Group then served as
CFO for General Magic, California Microwave and QAD Incorporated
before joining Novell.


Robert E. Ricehas been a Director of the Company
since April 2000 and served as President and Chief Executive
Officer from April 2000 until August 2003. Mr. Rice
currently serves as Executive Chairman of the Board of Directors
and, in this capacity, is an executive officer of Viewpoint.
Mr. Rice joined the Company in 1997 upon the Companys
acquisition of Real Time Geometry, a company Mr. Rice
co-founded in 1995. Mr. Rice served as Vice President of
Strategic Affairs at the Company from 1997 until September 1999.
He was the President and director of Metastream Corporation, a
subsidiary of the Company, from its formation in June 1999 until
its merger with and into the Company in November 2000. Before
founding Real Time Geometry, Mr. Rice was a partner at the
law firm of Milbank, Tweed, Hadley and McCloy LLP, where he
advised on various corporate, tax, and intellectual property
issues.

Executive Officers of the Company

William H. Mitchellhas served as Chief Financial
Officer of the Company since August 2003. From July 2002 to
August 2003, Mr. Mitchell served as Chief Financial Officer
of MaxWorldwide, Inc., an Internet-based provider of marketing
solutions for advertisers and web publishers. From January 2001
to July 2002, Mr. Mitchell served as Chief Financial
Officer for Tally Systems, Inc., a software development company.
He served as Executive Vice President and Chief Financial
Officer of Bigfoot Interactive, an Internet advertising company,
from July 1999 to January 2001, and as Chief Operating Officer
of Bigfoot International from October 1998 to July 1999.
Mr. Mitchell graduated with an A.B. from Dartmouth College,
MS and MS/ M.B.A. degrees from Northeastern University and
obtained his certified public accountant license in 1982.

Brian J. ODonoghueserves as Senior Vice President
and General Counsel of the Company. Mr. ODonoghue was
an attorney at Milbank, Tweed, Hadley, and McCloy LLP,
specializing in corporate and litigation matters from 1995 until
joining the Company as General Counsel in May 2000.
Mr. ODonoghue received his Juris Doctorate from
Fordham University School of Law in 1995.

Audit Committee and Audit Committee Financial
Expert

The Company has an audit committee established by
and amongst its board of directors for the purpose of overseeing
the Companys accounting and financial reporting processes
and audits of the Companys financial statements. The Audit
Committee is comprised of Mr. Raney, serving as chairman,
Mr. Crabbe, and Mr. Jones. The Board of Directors has
determined that Mr. Raney qualifies as an audit
committee financial expert as defined in Item 401(h)
of Regulation S-K, and that Mr. Raney is
independent as that term is used in Item 7(d)(3)(iv)
of Schedule 14A under the Securities Exchange Act.

Section 16(a) Beneficial Ownership
Reporting Compliance

Section 16(a) of the Securities Exchange Act
of 1934, as amended, requires the Companys directors,
certain officers, and persons who own more than ten percent of a
registered class of the Companys securities, to file with
the SEC reports of ownership and changes in ownership of Common
Stock and other equity securities of the Company. Officers,
directors and greater-than ten percent stockholders are required
by SEC regulations to furnish the Company with copies of all
Section 16(a) forms they file. To the Companys
knowledge, based solely on a review of the copies of such
reports furnished to the Company and written representations
that no other reports were required, the Company believes that
during the year ended December 31, 2003, its officers,
directors and greater-than ten percent stockholders complied
with all Section 16(a) filing requirements.

Code of Business Conduct

The Company has adopted a Code of Business
Conduct and Ethics applicable to directors, officers, and all
employees of the Company. Viewpoints Code of Business
Conduct and Ethics is available on the Companys web site
at www.viewpoint.comunder the Investor
Relations tab. The Company intends to post on its web site
any amendments to, or waivers from its Code of Business Conduct
and Ethics applicable to any employees.

4



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##### 






Item 11. Executive
Compensation

Executive Compensation

The following table presents certain information
with respect to annual compensation and long-term compensation
awarded during fiscal years 2001, 2002, and 2003 to individuals
who have served as the Companys Chief Executive Officer
during 2003 and its six other most highly compensated executive
officers as of December 31, 2003 (collectively, the
Named Executive Officers).

Summary Compensation Table

|                            |                                                                 |                     |      |        |  |            |         |                        |  |         |        |              |  |   |        |        |     |  |           |         |  |   |        |        |    
|--------------------------- | --------------------------------------------------------------- | ------------------- | ---- | ------ |  | ---------- | ------- | ---------------------- |  | ------- | ------ | ------------ |  | - | ------ | ------ | --- |  | --------- | ------- |  | - | ------ | ------ | ---
|                            |                                                                 |                     |      |        |  |            |         |                       
|                            |                                                                 |                     |      |        |  |            |         | Long Term Compensation
|                            |                                                                 |                     |      |        |  |            |         |                       
|                            |                                                                 |                     |      |        |  | Securities |         |                       
|                            |                                                                 | Annual Compensation |      | Other  |  | Underlying |         |                       
|                            |                                                                 |                     |      | annual |  | Company    |         | All other             
|Name and Principal Position |                                                                 | Year                |      | Salary |  | Bonus      |         | compensation           |  | Options |        | Compensation
|                            |                                                                 |                     |      |        |  |            |         |                        |  |         |        |             
|Jay S. Amato                |                                                                 |                     | 2003 |        |  | $          | 157,240 |                        |  |         |       |              |  | $ | 4,369  | (1)    |     |  | 2,050     |         |  |   |       |       
|                            | President and Chief executive Officer                           |                     |      |        |  |            |         |                        |  |         |        |              |  |   |        |        |     |  |           |         |  |   |        |        |    
|Robert Rice(2)              |                                                                 |                     | 2003 |        |  | $          | 330,000 |                        |  |         |       |              |  | $ | 11,931 | (1)    |     |  | 925,000   |         |  | $ | 9,373  | (3)   
|                            | Executive Chairman                                              |                     |      | 2002   |  |            | $       | 330,000                |  |         |        |             |  |   | $      | 18,004 | (1) |  |           |        |  |   | $      | 12,953 | (5)
|                            |                                                                 |                     | 2001 |        |  | $          | 330,000 |                        |  |         |       |              |  | $ | 18,004 | (1)    |     |  | 1,200,000 |         |  |   |       |       
|Ales Holecek(6)             |                                                                 |                     | 2003 |        |  | $          | 171,667 |                        |  |         |       |              |  |   |       |        |     |  | 350,000   |         |  |   |       |       
|                            | Senior Vice President, Technology                               |                     |      | 2002   |  |            | $       | 160,000                |  |         |        |             |  |   |        |       |     |  |           | 350,000 |  |   |        |       |    
|                            |                                                                 |                     | 2001 |        |  | $          | 155,000 |                        |  | $       | 50,000 |              |  |   |       |        |     |  | 725,000   |         |  |   |       |       
|Sreekant Kotay(7)           |                                                                 |                     | 2003 |        |  | $          | 150,000 |                        |  | $       | 50,000 |              |  |   |       |        |     |  | 725,000   |         |  |   |       |       
|                            | Executive Vice President, Technology Marketing
    and Strategy |                     |      | 2002   |  |            | $       | 200,000                |  |         |        |             |  |   |        |       |     |  |           |        |  |   |        |       |    
|                            |                                                                 |                     |      | 2001   |  |            | $       | 200,000                |  |         |        |             |  |   |        |       |     |  |           |        |  |   |        |       |    
|William H. Mitchell         |                                                                 |                     | 2003 |        |  | $          | 98,028  |                        |  | $       | 6,250  |              |  | $ | 10,400 | (8)    |     |  | 550,000   |         |  |   |       |       
|                            | Chief Financial Officer                                         |                     |      |        |  |            |         |                        |  |         |        |              |  |   |        |        |     |  |           |         |  |   |        |        |    
|Thomas Morgan               |                                                                 |                     | 2003 |        |  | $          | 200,000 |                        |  |         |       |              |  |   |       |        |     |  | 200,000   |         |  |   |       |       
|                            | Senior Vice President, Services                                 |                     |      | 2002   |  |            | $       | 127,997                |  |         |        |             |  |   |        |       |     |  |           | 125,000 |  |   |        |       |    
|Brian ODonoghue            |                                                                 |                     | 2003 |        |  | $          | 197,400 |                        |  |         |       |              |  |   |       |        |     |  | 575,000   |         |  |   |       |       
|                            | Senior Vice President and General Counsel                       |                     |      | 2002   |  |            | $       | 200,000                |  |         |        |             |  |   |        |       |     |  |           | 200,000 |  |   |        |       |    
|                            |                                                                 |                     |      | 2001   |  |            | $       | 187,499                |  |         |        |             |  |   |        |       |     |  |           |        |  |   |        |       |    
|Anthony L. Pane(9)          |                                                                 |                     | 2003 |        |  | $          | 188,723 |                        |  |         |       |              |  |   |       |        |     |  |          |         |  | $ | 38,462 | (10)  
|                            | Senior Vice President and Chief Financial                       |                     |      | 2002   |  |            | $       | 197,500                |  |         |        |             |  |   |        |       |     |  |           | 67,500  |  |   |        |       |    
|                            | Officer                                                         |                     |      | 2001   |  |            | $       | 170,000                |  |         | $      | 20,000       |  |   |        |       |     |  |           |        |  |   |        |       |    



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|    |                                                                                                                                                                                                        
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Represents auto allowance.                                                                                                                                                                             
|   
|(2) | Served as Chief Executive Officer until August
    2003 and is currently serving as Executive Chairman of the Board
    of Directors.                                                                  
|   
|(3) | Represents payment for life insurance premiums
    for period beginning in April 2003 and ending in April 2004.                                                                                        
|   
|(4) | Represents auto allowance of $9,660 and
    reimbursement in 2002 for taxes paid for life insurance premiums
    for 2000 and 2001 and for period beginning in April 2002 and
    ending in April 2003.
|   
|(5) | Represents reimbursement in 2002 for life
    insurance premiums for 2000 and 2001 and for period beginning in
    April 2002 and ending in April 2003.                                                
|   
|(6) | Separated from the Company as of February 2004.                                                                                                                                                        
|   
|(7) | Separated from the Company as of October 2003.                                                                                                                                                         
|   
|(8) | Represents housing allowance from August 2003 to
    December 2003.                                                                                                                                    
|   
|(9) | Separated from the Company as of November 2003.                                                                                                                                                        



|     |                      
|---- | ---------------------
|(10) | Represents severance.

5



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##### 



Stock Option Grants

The following table presents information
regarding stock options granted to the Named Executive Officers
during 2003. In accordance with the rules of the SEC, also shown
below is the potential realizable value over the term of the
option (the period from the grant date to the expiration date)
based on assumed rates of stock appreciation from the option
exercise price of 5% and 10%, compounded annually. These amounts
do not represent the Companys estimate of future stock
price. Actual gains, if any, on stock option exercises will
depend on the future performance of Company common stock.

Option Grants in 2003

|                       |  |                   |           |                             |  |             |       |                             |  |    |      |     |  |  |            |  |  |   |         |  |  |   |           | 
|---------------------- |  | ----------------- | --------- | --------------------------- |  | ----------- | ----- | --------------------------- |  | -- | ---- | --- |  |  | ---------- |  |  | - | ------- |  |  | - | --------- | 
|                       |  |                   |           |                             |  |            
|                       |  | Individual Grants |           |                            
|                       |  |                   |           | Potential realizable values
|                       |  | Number of         |           | Percent of                  |  |             |       | at assumed annual rates    
|                       |  | Securities        |           | total options               |  |             |       | of stock price appreciation
|                       |  | Underlying        |           | granted to                  |  |             |       | for option term            
|                       |  | Options           |           | employees in                |  | Exercise or |       | Expiration                  |  |   
|Name                   |  | Granted           |           | fiscal year                 |  | base price  |       | date                        |  | 5% |      | 10%
|                       |  |                   |           |                             |  |             |       |                             |  |    |      |    
|Jay S. Amato(1)        |  |                   | 1,250,000 |                             |  |             | 16.34 | %                           |  | $  | 0.72 |     |  |  | 8/11/2013  |  |  | $ | 647,449 |  |  | $ | 1,564,056 | 
|Jay S. Amato(2)        |  |                   | 800,000   |                             |  |             | 10.45 | %                           |  | $  | 0.82 |     |  |  | 11/17/2013 |  |  | $ | 412,555 |  |  | $ | 1,045,495 | 
|Robert E. Rice(3)      |  |                   | 200,000   |                             |  |             | 2.61  | %                           |  | $  | 0.82 |     |  |  | 11/17/2013 |  |  | $ | 103,139 |  |  | $ | 261,374   | 
|Robert E. Rice(4)      |  |                   | 725,000   |                             |  |             | 9.47  | %                           |  | $  | 0.74 |     |  |  | 4/14/2013  |  |  | $ | 337,402 |  |  | $ | 855,043   | 
|Ales Holecek(5)(3)     |  |                   | 150,000   |                             |  |             | 1.96  | %                           |  | $  | 0.82 |     |  |  | 11/17/2013 |  |  | $ | 77,354  |  |  | $ | 196,030   | 
|Ales Holecek(3)        |  |                   | 200,000   |                             |  |             | 2.61  | %                           |  | $  | 0.74 |     |  |  | 4/14/2013  |  |  | $ | 93,076  |  |  | $ | 235,874   | 
|Sreekant Kotay(6)(7)   |  |                   | 725,000   |                             |  |             | 9.47  | %                           |  | $  | 0.74 |     |  |  | 4/14/2013  |  |  | $ | 337,402 |  |  | $ | 855,043   | 
|William H. Mitchell(2) |  |                   | 200,000   |                             |  |             | 2.61  | %                           |  | $  | 0.82 |     |  |  | 11/17/2013 |  |  | $ | 103,139 |  |  | $ | 261,374   | 
|William H. Mitchell(3) |  |                   | 350,000   |                             |  |             | 4.57  | %                           |  | $  | 0.71 |     |  |  | 8/4/2013   |  |  | $ | 50,776  |  |  | $ | 82,005    | 
|Tom Morgan(3)          |  |                   | 75,000    |                             |  |             | 0.98  | %                           |  | $  | 0.82 |     |  |  | 11/17/2013 |  |  | $ | 38,677  |  |  | $ | 98,015    | 
|Tom Morgan(3)          |  |                   | 125,000   |                             |  |             | 1.63  | %                           |  | $  | 0.74 |     |  |  | 4/14/2013  |  |  | $ | 9,481   |  |  | $ | 19,425    | 
|Brian ODonoghue(3)    |  |                   | 250,000   |                             |  |             | 3.27  | %                           |  | $  | 0.75 |     |  |  | 12/22/2013 |  |  | $ | 9,375   |  |  | $ | 18,750    | 
|Brian ODonoghue(3)    |  |                   | 325,000   |                             |  |             | 4.25  | %                           |  | $  | 0.74 |     |  |  | 4/14/2013  |  |  | $ | 24,651  |  |  | $ | 50,505    | 



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|    |                                                                                                                                                                                                     
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Fifty percent (50%) of the shares subject to the
    option vested on August 11, 2004 and the remaining fifty percent
    (50%) vest on August 11, 2005.                                            
|   
|(2) | One hundred percent (100%) of the shares subject
    to the option vested on the date of grant.                                                                                                     
|   
|(3) | Twelve and one-half percent (12.5%) of the shares
    subject to the option vested three (3) months following the
    date of grant and 1/21 of the remaining shares vest monthly
    thereafter.   
|   
|(4) | Vests ratably through 12/31/04.                                                                                                                                                                     
|   
|(5) | Separated from the Company as of February 2004.                                                                                                                                                     
|   
|(6) | Separated from the Company as of October 2003.                                                                                                                                                      
|   
|(7) | Twenty-five percent (25%) of the shares subject
    to the option vested on the first anniversary of the date of
    grant and 1/36th of the remaining shares were scheduled to vest
    thereafter.

6



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##### 



Option Exercises in 2003 and Fiscal Year-End
Option Values

The following table presents information with
respect to options to purchase Company common stock exercised
during fiscal year 2003 by the Named Executive Officers, and the
value of unexercised options at December 31, 2003.

|                    |  |             |   |          |  |                        |   |                              |  |             |           |               |  |  |           |  |  |   |       |  |  |   |        | 
|------------------- |  | ----------- | - | -------- |  | ---------------------- | - | ---------------------------- |  | ----------- | --------- | ------------- |  |  | --------- |  |  | - | ----- |  |  | - | ------ | 
|                    |  |             |   |          |  |                        |   |                             
|                    |  |             |   |          |  | Number of securities   |   | Value of unexercised In-the-
|                    |  |             |   |          |  | underlying unexercised |   | money options at            
|                    |  | Shares      |   |          |  | options at 31-Dec-03   |   | December 31, 2003(1)        
|                    |  | acquired on |   | Value    |  |                        |   |                             
|Name                |  | Exercise    |   | Realized |  | Exercisable            |   | Unexercisable                |  | Exercisable |           | Unexercisable
|                    |  |             |   |          |  |                        |   |                              |  |             |           |              
|Jay S. Amato        |  |             |  |          |  |                        |  |                              |  |             | 800,000   |               |  |  | 1,250,000 |  |  |   |      |  |  | $ | 37,500 | 
|Robert E. Rice      |  |             |  |          |  |                        |  |                              |  |             | 1,963,504 |               |  |  | 721,161   |  |  | $ | 3,107 |  |  | $ | 4,143  | 
|Ales Holecek        |  |             |  |          |  |                        |  |                              |  |             | 226,167   |               |  |  | 455,833   |  |  | $ | 667   |  |  | $ | 1,333  | 
|William H. Mitchell |  |             |  |          |  |                        |  |                              |  |             | 258,333   |               |  |  | 291,667   |  |  |   |      |  |  |   |       | 
|Thomas Morgan       |  |             |  |          |  |                        |  |                              |  |             | 111,980   |               |  |  | 213,020   |  |  | $ | 417   |  |  | $ | 833    | 
|Brian O Donoghue   |  |             |  |          |  |                        |  |                              |  |             | 385,834   |               |  |  | 619,166   |  |  | $ | 1,083 |  |  | $ | 2,167  | 



---



|    |                                                                                                                                                                                                       
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The value of unexercised, in-the-money options is
    the difference between the exercise price of the options and the
    fair market value of Company common stock at December 31,
    2003 ($0.75).

Compensation of Directors

The Company compensates each of its non-employee
directors as follows: each non-employee director is paid (i)
$2,500 at the end of each fiscal quarter in which he or she is a
director, (ii) $1,000 for each regular Board meeting he or she
attends, and (iii) $500 for each Board committee meeting he or
she attends; provided, however, that if more than one committee
meeting is held on the same day or a Board meeting and one or
more committee meetings are held on the same day, no more than
the initial $500 or $1,000, as the case may be, is paid to any
director for all such meetings attended by such director on such
date.

Non-employee directors participate in the
Companys 1995 Director Option Plan (the Director
Plan). Under the Director Plan, each non-employee director
who joins the Board is automatically granted an option to
purchase 20,000 shares of Common Stock on the date upon which
such person first becomes a director. In addition, each
non-employee director automatically receives an option to
purchase 5,000 shares of Common Stock on January 1 of each year,
provided the director has been a member of the Board for at
least six months. The exercise price of each option granted
under the Director Plan is equal to the fair market value of the
Common Stock on the date of grant. The 20,000 share grant vests
at a rate of one-eighth of the option shares upon the end of the
first six-month period after the date of grant and
one-forty-eighth of the remaining option shares per month
thereafter, provided the optionee remains a director of the
Company. The 5,000 share grant vests at the rate of one-half of
the option shares upon the end of the first six-month period
after the date of grant and one-twelfth of the remaining option
shares per month thereafter, provided the optionee remains a
director of the Company. Options granted under the Director Plan
have a term of ten years unless terminated sooner, whether upon
termination of the optionees status as a director or
otherwise pursuant to the Director Plan.

Employment Agreements with Executive
Officers

The Company entered into agreements with
Messrs. Amato, Holecek, Mitchell, Morgan, ODonoghue,
and Rice.

The Company entered into an employment agreement
with Mr. Amato in August 2003 for a two-year term. The
agreement provides for an annual base salary of $395,000, a
signing bonus of $50,000, and additional bonuses based on the
Companys achievement of certain financial targets.
Mr. Amato was granted an option to acquire 1,250,000 shares
of common stock at an exercise price of $0.72 per share, the
closing price of the Companys common stock on the day
immediately preceding the commencement of Mr. Amatos
employment. Fifty percent (50%) of the shares subject to the
option vest on each of the first and second anniversaries of
Mr. Amatos employment. However, if
Mr. Amatos employment is terminated by the Company
without cause (as defined) or by Mr. Amato for good reason (as
defined), Mr. Amato is entitled to

7



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##### 



receive an amount equal to two times his base
salary and all outstanding options issued to Mr. Amato would
immediately vest and become exercisable. In addition, if Mr.
Amatos employment is terminated within one year following
a change in control of the Company (as defined), Mr. Amato
would be entitled to receive two times his base salary and all
options issued to Mr. Amato would immediately vest and
become exercisable.


The Company entered into an employment agreement
with Mr. Holecek in 1996 under which the Company retained
Mr. Holecek as Associate Engineer for an annual base salary
of $40,000. Mr. Holecek has been promoted several times
since starting with the Company and now serves as Senior Vice
President of Technology at an annual base salary of $200,000. In
2003, the Company entered into a termination protection
agreement with Mr. Holecek which provides that
Mr. Holecek would be entitled to receive a payment equal to
two times his base salary and all outstanding options issued to
Mr. Holecek would vest and become exercisable in the event
that Mr. Holeceks employment is terminated under
certain circumstances following a change in control of the
Company. Mr. Holecek resigned his employment with the Company in
February 2004.

The Company entered into an employment with
Mr. Mitchell in July 2003 under which Mr. Mitchell
agreed to serve as Chief Financial Officer for a two-year term.
The agreement provides for an annual base salary of $225,000, a
minimum annual bonus of $25,000, and an annual discretionary
bonus based on the achievement of management-based objectives of
up to $50,000. In accordance with the agreement, the Company
granted to Mr. Mitchell an option to acquire 350,000 shares
of common stock at an exercise price of $0.77 per share, the
closing price of the Companys common stock on the day
immediately preceding the commencement of
Mr. Mitchells employment. The agreement further
provides that the Company will grant to Mr. Mitchell an
option to acquire an additional 150,000 shares of common stock
on the first anniversary of his starting date at an exercise
price equal to the closing price of the Companys common
stock on that day. Twenty-five percent (25%) of the shares
subject to the options vest on the first anniversary of the date
of grant and one-thirty-sixth of the remaining shares vest
monthly thereafter. However, if Mr. Mitchells
employment is terminated by the Company without cause (as
defined) or by Mr. Mitchell for good reason (as defined), within
the first year of Mr. Mitchells employment,
Mr. Mitchell would be entitled to receive an amount equal
to 50% of his base salary and 50% of the unvested portion of
issued options would immediately vest in Mr. Mitchell and
become exercisable. If such termination occurs after the first
anniversary of Mr. Mitchells employment, 100% percent
of the shares subject to issued options would vest in
Mr. Mitchell and Mr. Mitchell would be entitled to receive
a payment equal to his base salary. In addition, if the Company
enters into an agreement with a third party in the first year of
Mr. Mitchells employment that leads to a change in
control of the Company (as defined) and Mr. Mitchells
employment is terminated within one year following the change in
control, Mr. Mitchell would be entitled to receive an
amount equal to his base salary and 50% of unvested options
would immediately vest in Mr. Mitchell and remain
exercisable. If the Company enters into an agreement with a
third party that leads to a change in control after the first
anniversary of Mr. Mitchells employment and
Mr. Mitchells employment is terminated within one
year following the change in control, Mr. Mitchell would be
entitled to receive two times his base salary and the options
issued to Mr. Mitchell would immediately vest and become
exercisable.

The Company entered into an employment agreement
with Mr. Morgan in March 2002 under which the Company
retained Mr. Morgan as General Manager of the
Companys enterprise solutions group at an annual base
salary of $175,000 and a bonus based on revenue generated by the
enterprise solutions group. Mr. Morgans position at the
Company subsequently changed to senior vice president of
operations and Mr. Morgans salary has been increased
to $200,000 per year. Under the agreement, the Company issued to
Mr. Morgan an option to acquire 125,000 shares of common
stock at an exercise price of $5.73. Twenty-five percent (25%)
of the shares subject to the option vested on the first
anniversary of the date of grant and one-thirty-sixth of the
remaining shares vest monthly thereafter. In 2003, the Company
entered into a termination protection agreement with
Mr. Morgan which provides that Mr. Morgan would be
entitled to receive a payment equal to two times his base salary
and all outstanding options issued to Mr. Morgan would vest
and become exercisable in the event that Mr. Morgans
employment is terminated under certain circumstances following a
change in control of the Company.

The Company entered into an employment agreement
with Mr. ODonoghue in April 2000 under which
Mr. ODonoghue agreed to serve as General Counsel of
the Company and the Company agreed to pay to

8



---



##### 



Mr. ODonoghue a base salary of
$150,000 per year and to grant to Mr. ODonoghue an
option to acquire 200,000 shares of the Companys common
stock. The agreement further provides that if
Mr. ODonoghues employment is terminated by the
Company without cause (as defined) or is terminated by
Mr. ODonoghue for good reason (as defined), Mr.
ODonoghue will receive an amount equal to his base salary
and the unvested portion of all stock options held by
Mr. ODonoghue would immediately vest and become
exercisable. In 2003, the Company entered into a termination
protection agreement with Mr. ODonoghue which
provides that Mr. ODonoghue would be entitled to
receive a payment equal to three times his base salary and all
outstanding options issued to Mr. ODonoghue would
vest and become exercisable in the event that
Mr. ODonoghues employment is terminated under
certain circumstances following a change in control of the
Company.


The Company entered into an employment agreement
with Mr. Rice in December 2001 under which Mr. Rice
agreed to serve as President and Chief Executive Officer of the
Company for a two-year term ending December 31, 2003. The
agreement provides for an annual base salary of $330,000. Under
the agreement, the Company granted to Mr. Rice two options
to purchase shares of the Companys common stock at a price
of $3.88 per share, the fair market value of the Companys
common stock on the date of grant. One of the stock option
grants provides Mr. Rice with the option to acquire 200,000
shares, with 25% of the total grant vesting on the first
anniversary of date of grant and the remainder vesting at the
rate of 1/36th per month thereafter. The second option grant
provides Mr. Rice with the option to acquire 1,000,000
shares (the Performance-Based Option). Six and
three-tenths percent (6.3%) of the shares subject to the
Performance-Based Option will vest at the end of each fiscal
quarter in which the Company achieves financial goals
established by the Board of Directors. If the Company does not
achieve such financial goals, the allotted shares will not vest
and Mr. Rice will have no right to exercise the option with
respect to the allotted shares except in accordance with the
following. If there is a change in control of the Company (as
defined in the employment agreement), a percentage of the
unvested portion of the Performance-Based Option will vest equal
to the multiple of the exercise price received by the Company as
consideration in the change in control. For example, if the per
share consideration received by the Company in the change in
control is twice the exercise price of the Performance-Based
Option, fifty percent of the unvested portion of the
Performance-Based Option will vest.

Mr. Rices employment agreement
provides that if his employment is terminated by the Company
without cause (as defined in the agreement), or by Mr. Rice
under circumstances where the Company reduced
Mr. Rices duties without his consent, Mr. Rice
would be entitled to immediate vesting of all of his unvested
Company stock options (other than the Performance-Based Option)
and severance pay equal to twice his annual base salary. The
Company and Mr. Rice entered into an amendment to
Mr. Rices employment agreement in July 2003 under
which Mr. Rice and the Company agreed that a change in
Mr. Rices position and title to Executive Chairman of
the Board of Directors would not trigger Mr. Rices
right to terminate the employment agreement and receive the
enhanced separation benefits. The agreement was further amended
to extend Mr. Rices employment to December 31, 2004
and to provide that any options vested in Mr. Rice at the
termination of his employment would remain exercisable by
Mr. Rice for a period of three years thereafter. Also in
2003, the Company entered into a termination protection
agreement with Mr. Rice which provides that Mr. Rice
would be entitled to receive a payment equal to three times his
base salary and all outstanding options issued to Mr. Rice
would vest and become exercisable in the event that
Mr. Rices employment is terminated under certain
circumstances following a change in control of the Company.

Compensation Committee Interlocks and Insider
Participation

Messrs. Bennett, Crabbe, and Jones served as
members of the Compensation Committee of the Board of Directors
during 2003. Bruce Chizen, Chief Executive Officer of Adobe
Systems Incorporated, served as a member of the Compensation
Committee of the Company until his resignation from the Board of
Directors on January 31, 2003. None of the individuals who
served as a member of the Compensation Committee is a former or
current officer or employee of the Company. No interlocking
relationship exists between any member of the Compensation
Committee and any member of any other companys board of
directors or compensation committee.

9



---



##### 






Item 12. Security Ownership of Certain
Beneficial Owners and Management

Security Ownership of Certain Beneficial
Owners

The following table sets forth certain
information as of April 28, 2004 regarding the only persons
known by the Company to own, directly or indirectly, more than
five percent of the Companys common stock. Except as
otherwise indicated, each person has sole voting and investment
power with respect to all shares shown as beneficially owned,
subject to community property laws where applicable.

|                                     |  |                  |           |               |  |  |      | 
|------------------------------------ |  | ---------------- | --------- | ------------- |  |  | ---- | 
|                                     |  |                  |           | Percentage of
|Name and Address of Beneficial Owner |  | Number of Shares |           | Class (1)    
|                                     |  |                  |           |              
|The Clark Estates                    |  |                  | 6,828,402 |               |  |  | 13.0 | 
|One Rockefeller Plaza, 31st Floor    |  |                  |           |               |  |  |      | 
|New York, NY 10020                   |  |                  |           |               |  |  |      | 
|Kevin S. Moore, Stephen M. Duff (2)  |  |                  |           |               |  |  |      | 
|                                    
|Computer Associates                  |  |                  | 4,426,141 |               |  |  | 8.5  | 
|One Computer Associates Plaza        |  |                  |           |               |  |  |      | 
|Islandia, NY 11749                   |  |                  |           |               |  |  |      | 
|                                    
|James E. Crabbe (3)                  |  |                  | 3,062,423 |               |  |  | 5.85 | 
|1305 SW Myrtle Court                 |  |                  |           |               |  |  |      | 
|Portland, OR 97201                   |  |                  |           |               |  |  |      | 



---



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Beneficial ownership is determined in accordance
    with the rules of the SEC. In computing the number of shares
    beneficially owned by a person and the percentage ownership of
    that person, shares of common stock subject to options held by
    that person, if any, that are currently exercisable or
    exercisable within 60 days of April 28, 2004 are
    deemed outstanding. Such shares, however, are not deemed
    outstanding for the purposes of computing the percentage
    ownership of any other person. Except as indicated in the
    footnotes to this table and pursuant to applicable community
    property laws, each stockholder named in the table has sole
    voting and investment power with respect to the shares set forth
    opposite such stockholders name. Percentage ownership is
    based on 52,348,298 shares of Common Stock outstanding on
    April 27, 2004.                                                          
|   
|(2) | These shares of the Companys Common Stock
    include (i) 553,400 shares acquired by The Clark Estates,
    Inc, a New York corporation, and (ii) 6,275,002 shares
    acquired in private placements by Federal Partners, L.P., a
    limited partnership, the general partner of which is Ninth Floor
    Corporation. The Clark Estates, Inc. provides management and
    administrative services to Federal Partners, L.P. and has the
    sole power to vote or to direct the vote and to dispose of or
    direct the disposition of all the shares. Mr. Moore is the
    President and a director of The Clark Estates, Inc. Stephen Duff
    is a Director of the Company, the Chief Investment Officer of
    The Clark Estates, Inc., and the Treasurer of Ninth Floor
    Corporation. Mr. Duff owns a small limited partnership
    interest in Federal Partners, L.P. and disclaims beneficial
    ownership of all but 6,223 of the shares listed in this table.
|   
|(3) | These shares of the Companys Common Stock
    include (i) 2,730,000 shares beneficially owned by the
    James E. Crabbe Revocable Trust, of which Mr. Crabbe is the
    trustee, (ii) 200,500 shares beneficially owned by the
    Phileo Foundation, of which Mr. Crabbe has investment
    discretion, (iii) 125,000 shares beneficially owned by the
    James E. Crabbe IRA, of which Mr. Crabbe has investment
    discretion, and (iv) 6,823 shares which Mr. Crabbe has the
    right to acquire under the terms of an option granted to
    Mr. Crabbe in connection with his services as a director of
    the Company.                                                                                                                                                                                                                                                                                                                                             

Security Ownership of Management

The following table sets forth information with
respect to the beneficial ownership of the Companys Common
Stock, as of April 28, 2004, by the Companys
directors, Named Executive Officers, and all directors and
executive officers as a group. Except as otherwise indicated,
each person has sole voting and investment

10



---



##### 



power with respect to all shares shown as
beneficially owned, subject to community property laws where
applicable.


|                                                                                                                                             |  |           |            |                   |  |                |           |               |  |  |            |  |  |  |        | 
|-------------------------------------------------------------------------------------------------------------------------------------------- |  | --------- | ---------- | ----------------- |  | -------------- | --------- | ------------- |  |  | ---------- |  |  |  | ------ | 
|                                                                                                                                             |  |           |            |                   |  | Common         |           |              
|                                                                                                                                             |  |           |            |                   |  | Stock          |           |              
|                                                                                                                                             |  | Number of |            |                   |  | and            |           | Percentage of
|Name                                                                                                                                         |  | Shares    |            | Vested Options(1) |  | Vested Options |           | Class(2)     
|                                                                                                                                             |  |           |            |                   |  |                |           |              
|Jay S. Amato                                                                                                                                 |  |           |           |                   |  |                | 800,000   |               |  |  | 800,000    |  |  |  | 1.51%  | 
|Thomas Bennett (3)                                                                                                                           |  |           |           |                   |  |                | 21,459    |               |  |  | 21,459     |  |  |  | 0.04%  | 
|James E. Crabbe                                                                                                                              |  |           | 3,055,600  |                   |  |                | 6,823     |               |  |  | 3,062,423  |  |  |  | 5.85%  | 
|Stephen Duff (4)                                                                                                                             |  |           | 6,223      |                   |  |                | 6,094     |               |  |  | 12,317     |  |  |  | 0.01%  | 
|Ales Holecek                                                                                                                                 |  |           |           |                   |  |                | 396,248   |               |  |  | 396,248    |  |  |  | 0.75%  | 
|Samuel H. Jones, Jr                                                                                                                          |  |           | 940,055    |                   |  |                | 204,584   |               |  |  | 1,144,639  |  |  |  | 2.18%  | 
|William H. Mitchell                                                                                                                          |  |           |           |                   |  |                | 345,833   |               |  |  | 345,833    |  |  |  | 0.66%  | 
|Thomas Morgan                                                                                                                                |  |           |           |                   |  |                | 176,823   |               |  |  | 176,823    |  |  |  | 0.34%  | 
|Brian ODonoghue                                                                                                                             |  |           |           |                   |  |                | 693,068   |               |  |  | 693,068    |  |  |  | 1.31%  | 
|Denis Raney                                                                                                                                  |  |           |           |                   |  |                |          |               |  |  |           |  |  |  | 0.00%  | 
|Robert Rice                                                                                                                                  |  |           |           |                   |  |                | 2,222,685 |               |  |  | 2,222,685  |  |  |  | 4.07%  | 
|All directors and executive officers as a group
    (12 persons)                                                                             |  |           | 4,001,878  |                   |  |                | 4,073,617 |               |  |  | 8,075,495  |  |  |  | 14.45% | 
|All directors and executive officers and Computer
    Associates International, Inc., The Clark Estates, Inc. and
    Federal Partners, L.P. |  |           | 15,256,421 |                   |  |                | 4,073,617 |               |  |  | 19,330,038 |  |  |  | 34.36% | 



---



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|*   | Percentage of shares beneficially owned is less
    than one percent of total.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   
|(1) | Represents shares issuable upon exercise of
    options to purchase Company Common Stock that are exercisable
    within 60 days of April 28, 2004.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   
|(2) | Beneficial ownership is determined in accordance
    with the rules of the SEC. In computing the number of shares
    beneficially owned by a person and the percentage ownership of
    that person, shares of common stock subject to options held by
    that person that are currently exercisable or exercisable within
    60 days of April 28, 2004 are deemed outstanding. Such
    shares, however, are not deemed outstanding for the purposes of
    computing the percentage ownership of any other person. Except
    as indicated in the footnotes to this table and pursuant to
    applicable community property laws, each stockholder named in
    the table has sole voting and investment power with respect to
    the shares set forth opposite such stockholders name.
    Percentage ownership is based on 52,348,298 shares of Common
    Stock outstanding on April 27, 2004.                                                                                                                                                                                      
|   
|(3) | Mr. Bennett is Senior Vice President of
    Computer Associates International, Inc., which owns 4,426,141
    shares of Company Common Stock. Mr. Bennett disclaims
    beneficial ownership of the shares owned by Computer Associates.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   
|(4) | Mr. Duff is a director of the Company, the
    Chief Investment Officer of The Clark Estates, Inc., and the
    Treasurer of Ninth Floor Corporation. Mr. Duff owns a small
    limited partnership interest in Federal Partners, L.P., the
    general partner of which is Ninth Floor Corporation. The Clark
    Estates, Inc. owns 553,400 shares of Company common stock and
    Federal Partners, L.P., owns 6,275,002 shares of Company common
    stock which it acquired in private placements in 2003. The Clark
    Estates, Inc. provides management and administrative services to
    Federal Partners, L.P. and has the sole power to vote or to
    direct the vote and to dispose of or direct the disposition of
    all the shares owned by The Clark Estates, Inc. and Federal
    Partners, L.P. Mr. Duff disclaims beneficial ownership of
    all shares owned by The Clark Estates, Inc. and Federal
    Partners, L.P. other than 6,223 shares over which Mr. Duff
    has beneficial ownership through his limited partnership
    interest in Federal Partners, L.P.

11



---



##### 



Equity Compensation Plan Information

The following table summarizes the Companys
equity compensation plans as of December 31, 2003:

|                                                                  |       |                         |           |                      |  |                           |      |      |  |  |           |           | 
|----------------------------------------------------------------- | ----- | ----------------------- | --------- | -------------------- |  | ------------------------- | ---- | ---- |  |  | --------- | --------- | 
|                                                                  |       |                         |           |                      |  | Number of securities     
|                                                                  |       |                         |           |                      |  | remaining available for  
|                                                                  |       | Number of securities to |           | Weighted average     |  | future issuance under    
|                                                                  |       | be issued upon exercise |           | price of outstanding |  | equity compensation plans
|                                                                  |       | of outstanding options, |           | options, warrants,   |  | (excluding securities    
|                                                                  |       | warrants, and rights    |           | and rights           |  | reflected in column (a)) 
|                                                                  |       |                         |           |                      |  |                          
|Plan Category                                                     |       | (a)                     |           | (b)                  |  | (c)                      
|                                                                  |       |                         |           |                      |  |                          
|Equity compensation plans approved by security
    holders        |       |                         | 8,936,685 |                      |  | $                         | 2.04 |      |  |  | 1,369,269 |          
|Equity compensation plans not approved by
    security holders(1) |       |                         | 1,600,000 |                      |  | $                         | 0.73 |      |  |  | 0         |          
|                                                                  | Total |                         |           | 10,536,685           |  |                           | $    | 1.84 |  |  |           | 1,369,269 | 



---



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | In August 2003, the Company agreed to issue to
    Mr. Amato an option to acquire 1,250,000 shares of Company
    common stock as an inducement to Mr. Amatos acceptance of
    employment with the Company as President and Chief Executive
    Officer. Fifty percent (50%) of the shares subject to the option
    vest on the first anniversary of Mr. Amatos
    employment and the remaining fifty percent (50%) vest on the
    second anniversary of Mr. Amatos employment. The
    exercise price of the option is equal to the closing price of
    the Companys common stock on the day immediately preceding
    Mr. Amatos first day of employment ($0.72).
    Similarly, in July 2003, the Company agreed to issue to
    Mr. Mitchell an option to acquire 350,000 shares of Company
    common stock as an inducement to Mr. Mitchells
    acceptance of employment with the Company as Chief Financial
    Officer. Twelve and one-half percent (12.5%) of the shares
    subject to the option vested three months after the first day of
    Mr. Mitchells employment and the remaining shares
    vest at the rate of 1/21 per month. The exercise price of the
    option is equal to the closing price of the Companys
    common stock on the day immediately preceding
    Mr. Mitchells first day of employment ($0.77).




Item 13. Certain Relationships and
Related Transactions.

The Company completed a private placement of
Company common stock with Federal Partners, L.P. on
November 12, 2003 under which the Company issued
3,125,000 shares of common stock at $0.80 per share
(for an aggregate purchase price of $2,500,000) and agreed to
register the issued shares under the Securities Act of 1933.
Federal Partners, L.P. is a limited partnership, the
general partner of which is Ninth Floor Corporation. The Clark
Estates, Inc. provides management and administrative
services to Federal Partners, L.P. The Clark
Estates, Inc. acquired 553,400 shares of Company
common stock several years ago and has the sole power to vote or
to direct the vote and to dispose of or direct the disposition
of all the shares owned by it and Federal Partners, L.P.

Stephen M. Duff became a director of the
Company in May 2003. He is the Chief Investment Officer of The
Clark Estates, Inc., and the Treasurer of Ninth Floor
Corporation. Mr. Duff also owns a small limited partnership
interest in Federal Partners, L.P.

In March 2003, the Company completed a private
placement of Company common stock and subordinated notes under
which Federal Partners, L.P. acquired 3,150,002 shares
of Company common stock and $3,050,000 principal amount of 4.95%
subordinated notes due in March 2006.

The Clark Estates, Inc. and Federal
Partners, L.P. own a combined total of 6,828,402 shares of
Company common stock which amounts to 13% of the Companys
outstanding common stock. Mr. Duff disclaims beneficial
ownership of all shares acquired by The Clark Estates, Inc.
and all but 6,223 shares of Company common stock acquired
by Federal Partners, L.P. in the private placements
occurring in 2003.

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Item 14. Principal Accountant Fees and
Services.

Audit Fees

The aggregate fees billed by the Companys
principal accounting firm PricewaterhouseCoopers LLP for
professional services rendered for the audit of the annual
financial statements for the fiscal year ended December 31,
2003 and 2002 and review of the financial statements included in
the Forms 10-Q for those years were approximately $233,000, and
$280,000, respectively.

Tax Fees

The aggregate fees billed by
PricewaterhouseCoopers LLP for services rendered to the Company
for tax compliance, tax advice, and tax planning, for the fiscal
years ended December 31, 2003 and 2002 were approximately
$71,000 and $75,000, respectively.

All Other Fees

The aggregate fees billed by
PricewaterhouseCoopers LLP for services rendered to the Company,
other than services described above under audit fees
or tax fees, for the fiscal years ended
December 31, 2003 and 2002 were approximately $206,000 and
$31,000, respectively. In 2003 the fees related primarily to
assistance in responding to comments of the SEC in connection
with the SECs review of the Companys registration
statement filings. In 2002 the fees related primarily to the
audit of the Companys 401k Plan. The Audit Committee
determined that the provision of the services described under
this caption All Other Fees is compatible with
maintaining the independence of PricewaterhouseCoopers LLP.

Pre-Approval Policies and Procedures

The Audit Committee on an annual basis reviews
audit and non-audit services to be performed by the
Companys independent auditors. All audit and non-audit
services are pre-approved by the Audit Committee, which
considers, among other things, the possible effect of the
performance of such services on the auditors independence.
The Audit Committee has considered the role of
PricewaterhouseCoopers LLP in providing services to the Company
for the fiscal year ended December 31, 2003 and has
concluded that such services are compatible with its
independence as the Companys auditors. The Audit Committee
has established pre-approval policies and procedures pursuant to
which all services will be rendered by the independent auditors
in the future. All of the services performed in connection with
the fees detailed above were approved by the Audit Committee.




PART IV



Item 15. Exhibits, Financial Statement
Schedule and Reports on Form 8-K


(a) The following documents are filed with
this Form 10-K/ A:

3. Exhibits.

| |      |  |  |                                                                                                                                                           
| | ---- |  |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------
| | 31.1 |  |  | Certifications of Jerry S. Amato, Chief Executive
    Officer pursuant to Rule 13a-14 of the Securities Exchange
    Act of 1934.                         
|
| | 31.2 |  |  | Certifications of William H. Mitchell, Chief
    Financial Officer, pursuant to Rule 13a-14 of the
    Securities Exchange Act of 1934.                   
|
| | 32.1 |  |  | Certification of Chief Executive Officer pursuant
    to 18 U.S.C. Section 1350, as adopted pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002.
|
| | 32.2 |  |  | Certification of Chief Financial Officer pursuant
    to 18 U.S.C. Section 1350, as adopted pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002.

13



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##### 



SIGNATURES

Pursuant to the requirements of Section 13
or 15(d) 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, in the City of New York,
State of New York, on the 29th day of April 2004.



| |                      
| | ---------------------
| | VIEWPOINT CORPORATION



| |     |                   
| | --- | ------------------
| | By: | /s/ JERRY S. AMATO

| |                                      
| | -------------------------------------
| |                                      
| | Jerry S. Amato                       
| | President and Chief Executive Officer

Pursuant to the requirements of the Securities
Exchange Act of 1934, this report has been signed by the
following persons on behalf of the registrant and in the
capacities indicated.

|                      |  |                                                                                                                           
|--------------------- |  | --------------------------------------------------------------------------------------------------------------------------
|Dated: April 29, 2004 |  | By: /s/ JERRY S. AMATOJerry S. Amato
    Director, President and Chief Executive Officer
    (Principal Executive Officer)
|Dated: April 29, 2004 |  | By: /s/ WILLIAM H. MITCHELLWilliam H. Mitchell
    Chief Financial Officer
    (Principal Financial Officer)              
|Dated: April 29, 2004 |  | By: /s/ CHRISTOPHER C. DUIGNANChristopher C. Duignan
    Vice President and Controller
    (Principal Accounting Officer) 
|Dated: April 29, 2004 |  | By: *Thomas Bennett
    Director                                                                                          
|Dated: April 29, 2004 |  | By: *Stephen Duff
    Director                                                                                            
|Dated: April 29, 2004 |  | By: *Samuel H. Jones, Jr.
    Director                                                                                    
|Dated: April 29, 2004 |  | By: *James Crabbe
    Director                                                                                            
|Dated: April 29, 2004 |  | By: *Dennis R. Raney
    Director                                                                                         
|Dated: April 29, 2004 |  | By: /s/ ROBERT E. RICERobert E. Rice
    Director                                                                         



|     |                                                                                                         
|---- | --------------------------------------------------------------------------------------------------------
|*By: | /s/ BRIAN J. ODONOGHUE 
     ________________________________________________ 
     Brian J. ODonoghue

Attorney-in-fact


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