<PAGE>

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                                 UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                            ------------------------

                                   FORM 10-Q

(MARK ONE)

[X]   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
     SECURITIES EXCHANGE ACT OF 1934

                 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2002

                                       OR

[ ]   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
     SECURITIES EXCHANGE ACT OF 1934

       FOR THE TRANSITION PERIOD FROM                TO                .

                        COMMISSION FILE NUMBER: 0-27168

                             VIEWPOINT CORPORATION
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

<Table>
<S>                                            <C>
                   DELAWARE                                      95-4102687
       (STATE OR OTHER JURISDICTION OF              (I.R.S. EMPLOYER IDENTIFICATION NO.)
        INCORPORATION OR ORGANIZATION)
</Table>

               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)

     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 [X]  No [ ]

     As of May 6, 2002, 39,888,965 shares of $0.001 par value common stock were
outstanding.

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<PAGE>

                               TABLE OF CONTENTS

<Table>
<Caption>
                                                                        PAGE
                                                                        ----
<S>       <C>                                                           <C>
PART I.   FINANCIAL INFORMATION

Item 1.   Consolidated Financial Statements

          Consolidated Balance Sheets -- March 31, 2002 and December
          31, 2001....................................................    3
          Consolidated Statements of Operations -- Three months ended
          March 31, 2002 and 2001.....................................    4
          Consolidated Statements of Cash Flows -- Three months ended
          March 31, 2002 and 2001.....................................    5
          Notes to Consolidated Financial Statements..................    6

Item 2.   Management's Discussion and Analysis of Financial Condition
          and Results of Operations...................................   11

Item 3.   Quantitative and Qualitative Disclosures About Market
          Risk........................................................   20

PART II.  OTHER INFORMATION

Item 1. through Item 6. ..............................................   21
SIGNATURES............................................................   22
</Table>

                                        2
<PAGE>

                         PART I.  FINANCIAL INFORMATION

ITEM 1.  CONSOLIDATED FINANCIAL STATEMENTS

                             VIEWPOINT CORPORATION

                          CONSOLIDATED BALANCE SHEETS
                     (IN THOUSANDS, EXCEPT PER SHARE DATA)

<Table>
<Caption>
                                                               MARCH 31,     DECEMBER 31,
                                                                 2002            2001
                                                              -----------    ------------
                                                              (UNAUDITED)     (AUDITED)
<S>                                                           <C>            <C>
ASSETS
Current assets:
  Cash and cash equivalents.................................   $   7,020      $   8,345
  Marketable securities.....................................       5,748          7,068
  Accounts receivable, net..................................       4,783          4,096
  Notes receivable, net.....................................         750            750
  Prepaid expenses and other current assets.................         559            836
  Current assets related to discontinued operations.........          77            141
                                                               ---------      ---------
          Total current assets..............................      18,937         21,236

Property and equipment, net.................................       4,335          4,662
Goodwill, net...............................................      31,276         33,042
Intangible assets, net......................................         143          2,361
Loans to officers...........................................         603            595
Other assets................................................           4             21
                                                               ---------      ---------
          Total assets......................................   $  55,298      $  61,917
                                                               =========      =========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable..........................................   $   1,168      $   1,314
  Accrued expenses..........................................       1,012          1,304
  Due to related parties, net...............................       7,736          4,764
  Deferred revenues.........................................         495            907
  Accrued incentive compensation............................         545            545
  Current liabilities related to discontinued operations....         425            346
                                                               ---------      ---------
          Total current liabilities.........................      11,381          9,180

Stockholders' equity:
Preferred stock, $.001 par value; 5,000 shares
  authorized -- no shares issued and outstanding at March
  31, 2002 and December 31, 2001............................          --             --
Common stock, $.001 par value; 75,000 shares
  authorized -- 39,947 shares issued and 39,787 shares
  outstanding at March 31, 2002, and 39,620 shares issued
  and 39,460 shares outstanding at December 31, 2001........          40             40
Paid-in capital.............................................     263,483        263,157
Deferred compensation.......................................      (9,386)       (11,279)
Treasury stock at cost; 160 shares at March 31, 2002 and
  December 31, 2001, respectively...........................      (1,015)        (1,015)
Accumulated other comprehensive income (loss)...............         (37)            18
Accumulated deficit.........................................    (209,168)      (198,184)
                                                               ---------      ---------
          Total stockholders' equity........................      43,917         52,737
                                                               ---------      ---------
          Total liabilities and stockholders' equity........   $  55,298      $  61,917
                                                               =========      =========
</Table>

  The accompanying notes are an integral part of these consolidated financial
                                  statements.
                                        3
<PAGE>

                             VIEWPOINT CORPORATION

                     CONSOLIDATED STATEMENTS OF OPERATIONS
                     (IN THOUSANDS, EXCEPT PER SHARE DATA)
                                  (UNAUDITED)

<Table>
<Caption>
                                                               THREE MONTHS ENDED
                                                                   MARCH 31,
                                                              --------------------
                                                                2002        2001
                                                              --------    --------
<S>                                                           <C>         <C>
Revenues:
  Licenses..................................................  $  3,539    $  1,908
  Services..................................................     1,319         883
                                                              --------    --------
Total revenues..............................................     4,858       2,791
                                                              --------    --------
Cost of Revenues:
  Licenses..................................................       109          96
  Services..................................................       908         810
                                                              --------    --------
Total cost of revenues......................................     1,017         906
                                                              --------    --------
Gross profit................................................     3,841       1,885
                                                              --------    --------
Operating expenses:
  Sales and marketing (including non-cash stock-based
     compensation charges totaling $1,044 and $596 for the
     three months ended March 31, 2002 and 2001,
     respectively)..........................................     3,901       5,175
  Research and development (including non-cash stock-based
     compensation charges totaling $195 and $740 for the
     three months ended March 31, 2002 and 2001,
     respectively)..........................................     1,326       2,448
  General and administrative (including non-cash stock-based
     compensation charges totaling $414 and $407 for the
     three months ended March 31, 2002 and 2001,
     respectively)..........................................     2,205       2,183
  Amortization of goodwill..................................        --       3,306
  Amortization of intangible assets.........................       661         831
  Impairment of goodwill and other intangible assets........     6,275          --
  Depreciation..............................................       498         415
                                                              --------    --------
Total operating expenses....................................    14,866      14,358
                                                              --------    --------
Loss from operations........................................   (11,025)    (12,473)
Other income................................................        41         424
                                                              --------    --------
Net loss from continuing operations.........................   (10,984)    (12,049)
Adjustment to net loss on disposal of discontinued
  operations................................................        --          --
                                                              --------    --------
Net loss....................................................  $(10,984)   $(12,049)
                                                              ========    ========
Basic and diluted net loss per common share:
  Net loss per common share from continuing operations......  $  (0.27)   $  (0.32)
  Net income (loss) per common share from discontinued
     operations.............................................        --          --
                                                              --------    --------
Net loss per common share...................................  $  (0.27)   $  (0.32)
                                                              ========    ========
Weighted average number of shares outstanding -- basic and
  diluted...................................................    40,330      37,985
                                                              ========    ========
</Table>

  The accompanying notes are an integral part of these consolidated financial
                                  statements.
                                        4
<PAGE>

                             VIEWPOINT CORPORATION

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)
                                  (UNAUDITED)

<Table>
<Caption>
                                                               THREE MONTHS ENDED
                                                                   MARCH 31,
                                                              --------------------
                                                                2002        2001
                                                              --------    --------
<S>                                                           <C>         <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss....................................................  $(10,984)   $(12,049)
Adjustments to reconcile net loss to net cash used in
  operating activities:
  Non-cash stock-based compensation charges.................     1,653       1,743
  Depreciation and amortization.............................     1,159       4,552
  Impairment of goodwill and other intangible assets........     6,275          --
  Reserve of notes receivable...............................        --        (145)
  Loss on sale and disposal of equipment....................        45          --
  Accrued interest income...................................        (7)         --
  Changes in operating assets and liabilities, net of
     acquisitions:
     Accounts receivable....................................      (687)       (182)
     Prepaid expenses and other assets......................       294        (196)
     Accounts payable.......................................      (146)       (796)
     Accrued expenses.......................................      (292)        237
     Due to/from related parties............................        44          42
     Deferred revenues......................................      (412)        272
     Net cash provided by discontinued operations...........       143       5,713
                                                              --------    --------
       Net cash used in operating activities................    (2,915)       (809)

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment.........................      (216)       (400)
Purchases of patents and trademarks.........................       (24)         --
Purchases of marketable securities..........................    (2,727)    (17,328)
Proceeds from sales and maturities of marketable
  securities................................................     4,000      12,850
                                                              --------    --------
       Net cash provided by (used in) investing
        activities..........................................     1,033      (4,878)

CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of loans to officers...............................        (1)         --
Proceeds from exercise of stock options.....................       566         556
                                                              --------    --------
       Net cash provided by financing activities............       565         556

Effect of exchange rate changes on cash and cash
  equivalents...............................................        (8)        (15)
                                                              --------    --------
Net decrease in cash and cash equivalents...................    (1,325)     (5,146)
Cash and cash equivalents at beginning of period............     8,345      13,320
                                                              --------    --------
Cash and cash equivalents at end of period..................  $  7,020    $  8,174
                                                              ========    ========
</Table>

  The accompanying notes are an integral part of these consolidated financial
                                  statements.
                                        5
<PAGE>

                             VIEWPOINT CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

     The unaudited consolidated financial statements at March 31, 2002 and for
the three months ended March 31, 2002 and 2001 have been prepared in accordance
with accounting principles generally accepted in the United States of America.
The interim financial information is unaudited, but reflects all adjustments
(consisting only of normal recurring accruals) that are, in the opinion of
management, necessary for a fair presentation of Viewpoint Corporation's
("Viewpoint" or the "Company") financial position and operating results for the
interim periods.

     These unaudited consolidated financial statements have been prepared in
accordance with the instructions for Form 10-Q and, therefore, do not include
all information and notes normally provided in annual financial statements. As a
result, these unaudited consolidated financial statements should be read in
conjunction with the consolidated financial statements and notes thereto,
together with management's discussion and analysis of financial condition and
results of operations, contained in Viewpoint's annual report on Form 10-K for
the fiscal year ended December 31, 2001. The results of operations for the three
months ended March 31, 2002 are not necessarily indicative of the results to be
expected for the fiscal year ending December 31, 2002 or any other future
periods.

     Certain reclassifications have been made to the 2001 consolidated financial
statements to conform to the 2002 presentation.

REVENUE RECOGNITION

     Revenue recognition rules for software companies are very complex. We
follow very specific and detailed guidelines in measuring revenue; however,
certain judgments affect the application of our revenue policy.

     The Company recognizes revenue in accordance with Statement of Position
("SOP") 97-2, "Software Revenue Recognition," as amended, and Staff Accounting
Bulletin ("SAB") No. 101 "Revenue Recognition in Financial Statements."

     Viewpoint generates revenues through two sources: (a) software licenses and
(b) services. License revenues are generated from licensing the rights to use
our products directly to end-users and indirectly through value added resellers
("VARs"). Service revenues are generated from fee based professional services,
sales of customer support services (maintenance contracts), and training
services performed for customers that license our products.

     License revenue includes sales of perpetual and term based licenses for
broadcasting Viewpoint 3D content, and limited licenses for its digital content
library. License revenue is recognized over the term of the license in a
term-based broadcast license model and up-front in a perpetual broadcast license
model, providing that no significant vendor obligations remain and the resulting
receivable is deemed collectible by management.

     Fee-based professional services are performed on a time-and-material basis
or on a fixed-fee basis, under separate service arrangements. Revenues related
to these services are recognized on a percentage-of-completion basis in
accordance with the provisions of SOP 81-1 "Accounting For Performance of
Construction-Type and Certain Production-Type Contracts."
Percentage-of-completion for service contracts is measured principally by the
percentage of costs incurred and accrued to date for each contract to the
estimated total cost for each contract at completion. Revenues from customer
support services are recognized ratably over the term of the contract. Revenues
from training services are recognized as services are performed.

     Standard terms for license agreements call for payment within 90 days.
Probability of collection is based upon the assessment of the customer's
financial condition through the review of their current financial

                                        6
<PAGE>
                             VIEWPOINT CORPORATION

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

statements or credit reports. For follow-on sales to existing customers, prior
payment history is also used to evaluate probability of collection. Our
agreements with customers do not contain product return rights.

     Fees from licenses sold together with fee-based professional services are
generally recognized upon delivery of the software, provided that the payment of
the license fees are not dependent upon the performance of the services, and the
services are not essential to the functionality of the licensed software. If the
services are essential to the functionality of the software, or payment of the
license fees are dependent upon the performance of the services, both the
software license and service fees are recognized under the percentage of
completion method of contract accounting.

     If the fee is not fixed or determinable, revenue is recognized as payments
become due from the customer. If a nonstandard acceptance period is required,
revenues are recognized upon the earlier of customer acceptance or the
expiration of the acceptance period.

     The Company periodically enters into nonmonetary arrangements whereby the
Company's licenses or services are exchanged for services of its customers.
Nonmonetary revenue is recognized at the estimated fair value of the services
received. Generally, nonmonetary revenues equal nonmonetary expenses; however,
due to timing, nonmonetary accounts receivable and accounts payable may result.

RECENT ACCOUNTING PRONOUNCEMENTS

     In July 2001, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 143, "Accounting for
Asset Retirement Obligations." The statement requires entities to record the
fair value of a liability for an asset retirement obligation in the period in
which it is incurred. The statement is effective for fiscal years beginning
after June 15, 2002. The adoption of SFAS No. 143 is not expected to have a
material impact on the Company's financial statements.

     In May 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statements
No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical
Corrections." The statement primarily rescinds and amends certain reporting
requirements relating to gains and losses from extinguishment of debt,
accounting for intangible assets of motor carriers, and accounting for leases in
sale-leaseback transactions. The provision of the statement relating to gains
and losses on extinguishment of debt is effective for fiscal years beginning
after May 15, 2002 while the remaining provisions of the statement are effective
for transactions occurring after May 15, 2002. The adoption of SFAS No. 145 is
not expected to have a material impact on the Company's financial statements.

2. NET LOSS PER COMMON SHARE

     Basic net loss per common share is computed using the weighted average
number of shares of common stock and diluted net loss per common share is
computed using the weighted average number of shares of common stock and common
equivalent shares outstanding. Common equivalent shares related to stock options
totaling 9,738,416 and 9,540,814 as of March 31, 2002 and 2001, respectively,
are excluded from the computation of diluted net loss per common share because
their effect was antidilutive.

     Basic and diluted net loss per common share for the three months ended
March 31, 2002, include the effect of 744,740 shares to be issued to Computer
Associates International, Inc. ("Computer Associates"), as if the shares were
issued and outstanding on June 8, 2001.

3. AGREEMENTS WITH COMPUTER ASSOCIATES

     Pursuant to the purchase of all of the outstanding capital stock of
Viewpoint Digital Inc. ("Viewpoint Digital") on September 8, 2000, the Company
issued two contingent promissory notes to Computer Associates each in the amount
of $15,000,000. During 2001, the Company entered into certain agreements

                                        7
<PAGE>
                             VIEWPOINT CORPORATION

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

with Computer Associates whereby Computer Associates agreed to accept
newly-issued shares of Viewpoint common stock having a value of $4,000,000, in
partial repayment of the first contingent promissory note due June 8, 2001. In
addition Computer Associates agreed to accept, at the Company's election, either
cash or newly-issued shares of Viewpoint common stock at an issue price of $4.00
per share in repayment of any additional amounts due under the promissory note
due June 8, 2001, and the first $8,943,000 of the $15,000,000 contingent
promissory note due April 30, 2002. The amount due Computer Associates under the
promissory note due June 8, 2001 is approximately $4,657,000 and the amount due
Computer Associates under the promissory note due April 30, 2002 is
approximately $2,928,000. These amounts are reflected in due to related parties
in the Company's consolidated balance sheet at March 31, 2002.

4. RELATED PARTY TRANSACTIONS

     During the three months ended March 31, 2002 and 2001, the Company recorded
revenues totaling $2,622,000 and $125,000 respectively, related to agreements,
including reseller arrangements, with two stockholders who have representatives
on the Company's Board of Directors. The $2,622,000 of revenues includes
approximately $1,625,000 resulting from an amendment in a contract with one of
the related parties, which resulted in the Company recording revenues when
payments are due, as contrasted to the partial deferral of those payments which
would otherwise have occurred. As of March 31, 2002, the Company has $1,233,000
in accounts receivable and $141,000 in deferred revenue relating to transactions
entered into with these related parties.

5. GOODWILL AND INTANGIBLE ASSETS

     Effective January 1, 2002, the Company completed the adoption of SFAS No.
141, "Business Combinations," and SFAS No. 142, "Goodwill and Other Intangible
Assets." SFAS No. 141 requires all business combinations initiated after June
30, 2001 to be accounted for using the purchase method of accounting. As
required by SFAS No. 142, the Company discontinued amortizing the remaining
balances of goodwill as of January 1, 2002. All remaining and future acquired
goodwill will be subject to impairment tests annually, or earlier if indicators
of potential impairment exist, using a fair-value-based approach. All other
intangible assets will continue to be amortized over their estimated useful
lives and assessed for impairment under SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets." In conjunction with the
implementation of SFAS No. 142, the Company has completed a goodwill impairment
review as of January 1, 2002 and found no impairment on that date.

     Upon adoption of the new Business Combination rules, an assembled workforce
no longer meets the definition of an identifiable intangible asset. As a result,
the net balance of $1,767,000, has been reclassified to goodwill on January 1,
2002.

                                        8
<PAGE>
                             VIEWPOINT CORPORATION

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     In accordance with SFAS No. 142, the effect of this accounting change is
reflected prospectively. Supplemental comparative disclosure as if the change
had been retroactively applied to the prior year period is as follows (in
thousands, except per share amounts):

<Table>
<Caption>
                                                               THREE MONTHS ENDED
                                                                   MARCH 31,
                                                              --------------------
                                                                2002        2001
                                                              --------    --------
<S>                                                           <C>         <C>
NET LOSS:
  Reported net loss.........................................  $(10,984)   $(12,049)
  Goodwill amortization(1)..................................        --       3,306
                                                              --------    --------
     Adjusted net loss......................................  $(10,984)   $ (8,743)
                                                              ========    ========
BASIC AND DILUTED LOSS PER SHARE:
  Reported loss per share...................................  $  (0.27)   $  (0.32)
  Goodwill amortization.....................................        --        0.09
                                                              --------    --------
     Adjusted basic and diluted loss per share..............  $  (0.27)   $  (0.23)
                                                              ========    ========
</Table>

---------------
(1) Includes $265 related to amortization of an assembled workforce that has
    been reclassified as goodwill effective January 1, 2002.

     The Company recorded $2,928,000 of additional goodwill during March of 2002
in connection with a contingent promissory note due Computer Associates on April
30, 2002 for the acquisition of Viewpoint Digital. As of March 31, 2002, due to
the persistence of unfavorable economic conditions along with lower-
than-expected revenues generated to date and reduced estimates of future
performance of the Viewpoint Digital assets, the Company performed an additional
impairment analysis on the goodwill and other intangible asset balances recorded
upon the acquisition of Viewpoint Digital. In accordance with the provisions of
SFAS No. 142 and SFAS No. 144, the Company recorded impairment charges totaling
$6,275,000. The fair value of the Viewpoint Digital assets was estimated using
the expected present value of future cash flows. The assumptions supporting the
cash flows, including the discount rate, were determined using the Company's
best estimates as of the date the impairment was recorded.

     The changes in the carrying amount of goodwill and intangible assets during
the three months ended March 31, 2002 are as follows (in thousands):

<Table>
<Caption>
                                                   GOODWILL    INTANGIBLE ASSETS     TOTAL
                                                   --------    -----------------    -------
<S>                                                <C>         <C>                  <C>
Balance as of January 1, 2002....................  $33,042          $ 2,361         $35,403
  Acquisitions during period.....................    2,928               24           2,952
  Impairment losses..............................   (4,694)          (1,581)         (6,275)
  Amortization...................................       --             (661)           (661)
                                                   -------          -------         -------
Balance as of March 31, 2002.....................  $31,276          $   143         $31,419
                                                   =======          =======         =======
</Table>

                                        9
<PAGE>
                             VIEWPOINT CORPORATION

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     Intangible assets as of March 31, 2002 and December 31, 2001 consisted of
the following (in thousands):

<Table>
<Caption>
                                                              MARCH 31,   DECEMBER 31,
                                                                2002          2001
                                                              ---------   ------------
<S>                                                           <C>         <C>
Viewpoint Digital Technology................................    $ --         $1,039
Viewpoint Digital Customer List.............................      --            401
Viewpoint Digital Trade Name................................      --            429
Covenant Not To Compete.....................................      --            361
Other Intangibles...........................................      --             12
Patents and Trademarks......................................     143            119
                                                                ----         ------
Total Intangible Assets.....................................    $143         $2,361
                                                                ====         ======
</Table>

     Amortization of patents and trademarks is estimated to be $2,000 a year for
the next five years.

6. COMPREHENSIVE LOSS

     Total comprehensive loss for the three months ended March 31, 2002 and 2001
consisted of the following (in thousands):

<Table>
<Caption>
                                                               THREE MONTHS ENDED
                                                                   MARCH 31,
                                                              --------------------
                                                                2002        2001
                                                              --------    --------
<S>                                                           <C>         <C>
Net loss....................................................  $(10,984)   $(12,049)
Foreign currency translation adjustment.....................        (8)        (15)
Unrealized gain (loss) on investments.......................       (47)         25
                                                              --------    --------
Comprehensive Loss..........................................  $(11,039)   $(12,039)
                                                              ========    ========
</Table>

                                        10
<PAGE>

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

     The following discussion should be read in conjunction with the
consolidated financial statements and notes thereto.

     In addition to historical information, this Quarterly Report on Form 10-Q
contains forward-looking statements that involve risks and uncertainties that
could cause actual results to differ materially. Factors that might cause or
contribute to such differences include, but are not limited to, those discussed
in the section entitled "Factors That May Affect Future Results of Operations."
You should carefully review the risks described in other documents we file from
time to time with the Securities and Exchange Commission, including future
Quarterly Reports on Form 10-Q to be filed in 2002. When used in this report,
the words "expects," "anticipates," "intends," "plans," "believes," "seeks,"
"targets," "estimates," and similar expressions are generally intended to
identify forward-looking statements. You should not place undue reliance on the
forward-looking statements, which speak only as of the date of this Quarterly
Report on Form 10-Q. We undertake no obligation to publicly release any
revisions to the forward-looking statements or reflect events or circumstances
after the date of this document.

OVERVIEW

     Viewpoint Corporation is a leading provider of interactive media
technologies and services. Its graphics operating system platform, the Viewpoint
Media Player, has been licensed by Fortune 500 companies and others for use in
online, offline and embedded applications serving a wide variety of needs,
including: business process visualizations, marketing campaigns, rich media
advertising and product presentations. The Company also provides cross media
digital solutions for film, broadcast television and games.

     The Company's primary initiatives include:

     - Licensing technology for specific marketing and e-commerce visualization
       solutions;

     - Providing a full range of fee-based digital asset content creation and
       engineering professional services for implementing visualization
       solutions for marketing and creating new and enhancing existing
       enterprise software applications;

     - Proliferating the Viewpoint format into digital advertisements on various
       digital media, primarily the Web and digital set-top cable boxes;

     - Forging technological alliances with leading interactive agencies and Web
       content providers; and

     - Maximizing market penetration and name recognition, including
       distribution of the Company's client-side software graphics operating
       system, the Viewpoint Media Player

     Viewpoint believes that its success will depend largely on its ability to
proliferate its digital technologies into various media, including broadcast
television, games, movies, print, closed intranets, new and existing enterprise
applications and television set-top boxes. Accordingly, Viewpoint has and
intends to continue to invest in research and development and sales and
marketing. Revenues from continuing operations primarily have been from the sale
of technology licenses and fee based professional services, including digital
content creation services and engineering services to enhance and create new
enterprise software applications.

     Viewpoint has a limited operating history upon which an evaluation of the
Company and its prospects can be based. Viewpoint's prospects must be considered
in light of the risks and difficulties frequently encountered by early stage
technology companies. There can be no assurance that Viewpoint will achieve or
sustain profitability. Viewpoint has had significant quarterly and annual
operating losses since its inception, and as of March 31, 2002, had an
accumulated deficit of $209,168,000.

                                        11
<PAGE>

                             RESULTS OF OPERATIONS

     The following table sets forth for the three months ended March 31, 2002
and 2001, the Company's consolidated statements of operations expressed as a
percentage of net revenues for the periods indicated:

<Table>
<Caption>
                                                              THREE MONTHS
                                                                 ENDED
                                                               MARCH 31,
                                                              ------------
                                                              2002    2001
                                                              ----    ----
<S>                                                           <C>     <C>
STATEMENT OF OPERATIONS DATA
Revenues:
  Licenses..................................................    73%     68%
  Services..................................................    27      32
                                                              ----    ----
Total revenues..............................................   100     100
                                                              ----    ----
Cost of revenues:
  Licenses..................................................     2       3
  Services..................................................    19      29
                                                              ----    ----
Total cost of revenues......................................    21      32
                                                              ----    ----
Gross profit................................................    79      68
                                                              ----    ----
Operating expenses:
  Sales and marketing (including non-cash stock-based
     compensation charges)..................................    81     185
  Research and development (including non-cash stock-based
     compensation charges)..................................    27      88
  General and administrative (including non-cash stock-based
     compensation charges)..................................    45      78
  Amortization of goodwill..................................    --     118
  Amortization of intangible assets.........................    14      30
  Impairment of goodwill and other intangible assets........   129      --
  Depreciation..............................................    10      15
                                                              ----    ----
Total operating expenses....................................   306     514
                                                              ----    ----
Loss from operations........................................  (227)   (446)
Other income................................................     1      15
                                                              ----    ----
Net loss from continuing operations.........................  (226)   (431)
Adjustment to net loss on disposal of discontinued
  operations................................................    --      --
                                                              ----    ----
Net loss....................................................  (226)%  (431)%
                                                              ====    ====
</Table>

REVENUES

<Table>
<Caption>
                                                          THREE MONTHS ENDED MARCH 31,
                                                          ----------------------------
                                                           2002     % CHANGE     2001
                                                          ------    --------    ------
                                                             (DOLLARS IN THOUSANDS)
<S>                                                       <C>       <C>         <C>
Total revenues..........................................  $4,858       74%      $2,791
</Table>

     The Company recognizes revenue in accordance with SOP 97-2, "Software
Revenue Recognition," as amended, and SAB No. 101 "Revenue Recognition in
Financial Statements."

     Viewpoint generates revenues through two sources: (a) software licenses and
(b) services. License revenues are generated from licensing the rights to use
our products directly to end-users and indirectly through VARs. Service revenues
are generated from fee based professional services, sales of customer support
services (maintenance contracts), and training services performed for customers
that license our products.

                                        12
<PAGE>

     License revenue includes sales of perpetual and term based licenses for
broadcasting viewpoint 3D content, and limited licenses for its digital content
library. License revenue is recognized over the term of the license in a
term-based broadcast license model and up-front in a perpetual broadcast license
model, providing that no significant vendor obligations remain and the resulting
receivable is deemed collectible by management.

     Fee-based professional services are performed on a time-and-material basis
or on a fixed-fee basis, under separate service arrangements. Revenues related
to these services are recognized on a percentage-of-completion basis in
accordance with the provisions of SOP 81-1 "Accounting for Performance of
Construction-Type and Certain Production-Type Contracts."
Percentage-of-completion for service contracts is measured principally by the
percentage of costs incurred and accrued to date for each contract to the
estimated total cost for each contract at completion. Revenues from customer
support services are recognized ratably over the term of the contract. Revenues
from training services are recognized as services are performed.

     License revenue increased approximately $1,631,000, or 85%, and service
revenue increased approximately $436,000, or 49%, for the three months ended
March 31, 2002, compared to the three months ended March 31, 2001. The increase
in revenues is primarily attributable to an increase in sales of licenses and
fee-based professional services resulting from increases to our direct sales
force and the expansion of our indirect channel partnerships. The persistence of
unfavorable economic conditions, however, continue to negatively impact our
revenue growth. The Company's revenues can also be negatively impacted by
increased competition in the market, the lack of acceptance of the Company's
existing products or the Company's failure to develop new products.

     During the three months ended March 31, 2002 and 2001, the Company recorded
revenues totaling $2,622,000 and $125,000 respectively, related to agreements,
including reseller arrangements, with two stockholders who have representatives
on the Company's Board of Directors. The $2,622,000 of revenues includes
approximately $1,625,000 resulting from an amendment in a contract with one of
the related parties, which resulted in the Company recording revenues when
payments are due, as contrasted to the partial deferral of those payments which
would otherwise have occurred.

     The Company expects its revenue to continue to increase in 2002 based upon
the visible increase in the market acceptance of our technology. It is
anticipated that the increase in revenues will be derived from both license and
service revenues.

COST OF REVENUES

<Table>
<Caption>
                                                           THREE MONTHS ENDED MARCH 31,
                                                           -----------------------------
                                                            2002      % CHANGE     2001
                                                           -------    ---------    -----
                                                              (DOLLARS IN THOUSANDS)
<S>                                                        <C>        <C>          <C>
Total cost of revenues...................................  $1,017        12%       $906
Percentage of total revenues.............................      21%                   32%
</Table>

     Costs of revenues consist primarily of salaries and consulting fees for
those who provide fee-based professional services. The increase in cost of
revenues is directly related to an increase in fee-based professional services.

     The Company expects cost of revenues to increase in absolute dollars, while
decreasing slightly as a percentage of total revenues, due to continuously
improving efficiencies and the mix of license and services revenues.

                                        13
<PAGE>

SALES AND MARKETING (INCLUDING NON-CASH STOCK-BASED COMPENSATION CHARGES
TOTALING $1,044 AND $596 FOR THE THREE MONTHS ENDED MARCH 31, 2002 AND 2001,
RESPECTIVELY)

<Table>
<Caption>
                                                          THREE MONTHS ENDED MARCH 31,
                                                          ----------------------------
                                                           2002     % CHANGE     2001
                                                          ------    --------    ------
                                                             (DOLLARS IN THOUSANDS)
<S>                                                       <C>       <C>         <C>
Sales and marketing.....................................  $3,901      (25)%     $5,175
Percentage of total revenues............................      81%                  185%
</Table>

     Sales and marketing expenses include salaries and benefits, sales
commissions, non-cash stock-based compensation charges, consulting fees and
travel expenses for our sales and marketing personnel. Sales and marketing
expenses also include the cost of programs aimed at increasing revenue, such as
advertising, trade shows and public relations.

     Sales and marketing expenses decreased $1,274,000, or 25%, for the three
months ended March 31, 2002 compared to the same period last year primarily due
to a decrease in salaries, benefits, travel and marketing costs offset by an
increase in non-cash stock-based compensation charges. Non-cash stock-based
compensation charges increased as certain personnel which were reflected in
research and development during the three months ended March 31, 2001, are now
reflected in sales and marketing due to a change in the nature of their duties.

     The Company does not expect a material increase in sales and marketing
expenses in 2002 as compared to 2001 based on the company's indirect marketing
strategy and the increased utilization of creative services personnel, which
will increase cost of revenues, rather than sales and marketing expenses. It is
expected that these decreases in costs will be partially offset by increases in
selling expenses to support the projected higher revenues. As a percentage of
total revenues, sales and marketing expenses are expected to decrease.

RESEARCH AND DEVELOPMENT (INCLUDING NON-CASH STOCK-BASED COMPENSATION CHARGES
TOTALING $195 AND $740 FOR THE THREE MONTHS ENDED MARCH 31, 2002 AND 2001,
RESPECTIVELY)

<Table>
<Caption>
                                                          THREE MONTHS ENDED MARCH 31,
                                                          ----------------------------
                                                           2002     % CHANGE     2001
                                                          ------    --------    ------
                                                             (DOLLARS IN THOUSANDS)
<S>                                                       <C>       <C>         <C>
Research and development................................  $1,326      (46)%     $2,448
Percentage of total revenues............................      27%                   88%
</Table>

     Research and development expenses consist primarily of salaries and
benefits for software developers, contracted development efforts, non-cash
stock-based compensation charges, and required equipment costs related to the
Company's product development efforts. The Company expenses as incurred research
and development costs necessary to establish the technological feasibility of
its internally developed software products and technologies. To date, the
establishment of technological feasibility of the Company's products and general
release have substantially coincided. As a result, the Company has not
capitalized any internal software development costs since costs qualifying for
such capitalization have not been significant. Additionally, the Company
capitalizes costs of software, consulting services, hardware and payroll-related
costs incurred to purchase or develop internal-use software, when technological
feasibility has been established, it is probable that the project will be
completed and the software will be used as intended. The Company expenses costs
incurred during preliminary project assessment, research and development,
re-engineering, training and application maintenance.

     Research and development expenses decreased $1,122,000, or 46%, for the
three months ended March 31, 2002 compared to the same period last year
primarily due to a decrease in salaries, benefits, contracted development, and
non-cash stock-based compensation charges. Salaries, benefits, and non-cash
stock-based compensation charges decreased as certain personnel which were
reflected in research and development during the three months ended March 31,
2001, are now reflected in sales and marketing due to a change in the nature of
their duties.

                                        14
<PAGE>

     The Company expects research and development expenses to remain relatively
flat in 2002, as compared to 2001. Anticipated increases in research and
development expenditures are expected to be offset by customer-specific
engineering efforts in the enterprise applications group, which will be
classified as cost of revenues. As a percentage of total revenues, research and
development expenses are expected to decrease.

GENERAL AND ADMINISTRATIVE (INCLUDING NON-CASH STOCK-BASED COMPENSATION CHARGES
TOTALING $414 AND $407 FOR THE THREE MONTHS ENDED MARCH 31, 2002 AND 2001,
RESPECTIVELY)

<Table>
<Caption>
                                                          THREE MONTHS ENDED MARCH 31,
                                                          ----------------------------
                                                           2002     % CHANGE     2001
                                                          ------    --------    ------
                                                             (DOLLARS IN THOUSANDS)
<S>                                                       <C>       <C>         <C>
General and administrative..............................  $2,205       1%       $2,183
Percentage of total revenues............................      45%                   78%
</Table>

     General and administrative expenses primarily consist of corporate overhead
of the Company, which includes salaries and benefits related to finance and
administration personnel along with other administrative costs such as legal,
accounting and investor relation fees, and insurance expense.

     General and administrative expenses increased $22,000, or 1%, for the three
months ended March 31, 2002 compared to the same period last year. The increase
is primarily due to an increase in insurance and legal costs offset by a
decrease in rent expense and office maintenance costs.

     General and administrative expenses are expected to remain relatively flat
in 2002 compared to 2001. As a percentage of total revenues, general and
administrative expenses are expected to decrease.

AMORTIZATION OF GOODWILL

<Table>
<Caption>
                                                            THREE MONTHS ENDED MARCH 31,
                                                            -----------------------------
                                                            2002     % CHANGE      2001
                                                            -----    ---------    -------
                                                               (DOLLARS IN THOUSANDS)
<S>                                                         <C>      <C>          <C>
Amortization of goodwill..................................   $--       (100)%     $3,306
Percentage of total revenues..............................     0%                    118%
</Table>

     Amortization of goodwill decreased $3,306,000 for the three months ended
March 31, 2002 compared to the same period last year primarily due to the
adoption of SFAS No. 142 on January 1, 2002. As a result of SFAS 142, the
Company ceased amortizing approximately $33,042,000 of goodwill. In lieu of
amortization, the Company is required to test goodwill for impairment on an
annual basis or earlier, if indicators of potential impairment exist.

AMORTIZATION OF INTANGIBLE ASSETS

<Table>
<Caption>
                                                              THREE MONTHS ENDED MARCH 31,
                                                             ------------------------------
                                                              2002      % CHANGE      2001
                                                             ------    ----------    ------
                                                                 (DOLLARS IN THOUSANDS)
<S>                                                          <C>       <C>           <C>
Amortization of intangible assets..........................   $661         (20)%      $831
Percentage of total revenues...............................     14%                     30%
</Table>

     Amortization of intangible assets decreased $170,000, or 20%, for the three
months ended March 31, 2002 compared to the same period last year primarily due
to a covenant not to complete becoming fully amortized during February of 2002.

                                        15
<PAGE>

IMPAIRMENT OF GOODWILL AND OTHER INTANGIBLE ASSETS

<Table>
<Caption>
                                                            THREE MONTHS ENDED MARCH 31,
                                                            -----------------------------
                                                             2002      % CHANGE     2001
                                                            -------    ---------    -----
                                                               (DOLLARS IN THOUSANDS)
<S>                                                         <C>        <C>          <C>
Impairment of goodwill and other intangible assets........  $6,275        NA         $--
Percentage of total revenues..............................     129%                    0%
</Table>

     In conjunction with the implementation of SFAS No. 142, the Company has
completed a goodwill impairment review as of January 1, 2002 and found no
impairment on that date. As of March 31, 2002, due to the persistence of
unfavorable economic conditions along with lower-than-expected revenues
generated to date and reduced estimates of future performance of the Viewpoint
Digital assets, the Company performed an additional impairment analysis on the
goodwill and other intangible asset balances recorded upon the acquisition of
Viewpoint Digital. In accordance with the provisions of SFAS No. 142 and SFAS
No. 144, the Company recorded impairment charges totaling $6,275,000. The fair
value of the Viewpoint Digital assets was estimated using the expected present
value of future cash flows. The assumptions supporting the cash flows, including
the discount rate, were determined using the Company's best estimates as of the
date the impairment was recorded.

DEPRECIATION

<Table>
<Caption>
                                                              THREE MONTHS ENDED MARCH 31,
                                                             ------------------------------
                                                              2002      % CHANGE      2001
                                                             ------    ----------    ------
                                                                 (DOLLARS IN THOUSANDS)
<S>                                                          <C>       <C>           <C>
Depreciation...............................................   $498         20%        $415
Percentage of total revenues...............................     10%                     15%
</Table>

     Depreciation expense increased $83,000, or 20%, for the three months ended
March 31, 2002 compared to the same period last year due to property and
equipment additions.

OTHER INCOME

<Table>
<Caption>
                                                            THREE MONTHS ENDED MARCH 31,
                                                            -----------------------------
                                                            2002     % CHANGE       2001
                                                            -----    ---------      -----
                                                               (DOLLARS IN THOUSANDS)
<S>                                                         <C>      <C>            <C>
Other income..............................................   $41        (90)%       $424
Percentage of total revenues..............................     1%                     15%
</Table>

     Other income primarily consists of interest and investment income on cash,
cash equivalents and marketable securities as well as the gain or loss on the
sale and disposal of equipment. As a result, other income fluctuates with
changes in the Company's cash, cash equivalents and marketable securities
balances and market interest rates.

     Other income decreased $383,000, or 90%, for the three months ended March
31, 2002 compared to the same period last year primarily due to a decrease in
average cash, cash equivalents and marketable securities balances as well as a
decline in interest rates.

     Other income is expected to decrease in absolute dollars and as a
percentage of total revenues in 2002 compared to 2001 due to a decline in
interest rates and an expected decrease in average cash, cash equivalents and
marketable securities balances.

FACTORS THAT MAY AFFECT FUTURE RESULTS OF OPERATIONS

     We believe that in the future our results of operations could be affected
by various factors including:

     - We have a limited operating history that makes an evaluation of our
       business difficult;

     - We have a history of losses and expect to incur losses in the future;

                                        16
<PAGE>

     - Our future revenues may be unpredictable and may cause our quarterly
       results to fluctuate;

     - We may be unable to meet our future capital requirements;

     - Our stock price is volatile and may continue to fluctuate in the future;

     - If the Internet does not continue to expand as a widespread commerce
       medium, demand for our products and technologies may decline
       significantly;

     - Our market is characterized by rapidly changing technology, and if we do
       not respond in a timely manner, our products and technologies may not
       succeed in the marketplace;

     - Potential delays in product releases could harm our business;

     - Undetected errors in our products and technologies could result in
       adverse publicity, reduced market acceptance or lawsuits by customers;

     - In order to increase market awareness of our products and generate
       increased revenue we may need to expand our sales and marketing
       capabilities;

     - We may be unable to protect our intellectual property rights and we may
       be liable for infringing the intellectual property rights of others;

     - Security risks could limit the growth of e-commerce and expose us to
       litigation or liability;

     - Increasing government regulation could increase our cost of doing
       business or increase our legal exposure;

     - We may need to enter into other business combinations and strategic
       alliances which could be difficult to integrate and may disrupt our
       business;

     - The loss of any of our key personnel would harm our business;

     - Our revenues could be negatively affected by the loss of resellers and
       strategic partners and if we fail to establish, maintain or expand our
       strategic relationships for the integration of our technology with the
       services of third parties, the growth of our business may cease or
       decline;

     - Our lengthy sales cycle and product implementation makes it difficult to
       predict our quarterly results;

     - Our projects vary in size and scope; therefore, a client that accounts
       for a large portion of our revenues in one period may not generate
       similar amounts of revenue in subsequent periods;

     - Our future success depends on our ability to identify, hire, train and
       retain highly qualified employees;

     - Our charter documents could make it more difficult for a third party to
       acquire us;

     - Our business is subject to general economic conditions as well as those
       specific to the Internet and related industries.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

     Viewpoint's discussion and analysis of its financial condition and results
of operations are based upon its consolidated financial statements, which have
been prepared in accordance with accounting principles generally accepted in the
United States of America. The preparation of these financial statements requires
the Company to make estimates and judgments that affect the reported amounts of
assets, liabilities, revenues and expenses, and related disclosure of contingent
assets and liabilities. On an on-going basis, the Company evaluates its critical
accounting policies and estimates, including those related to revenue
recognition and long-lived assets. We base our estimates on historical
experience and on various other assumptions that we believe to be reasonable
under the circumstances though actual results may differ from these estimates
under different assumptions or conditions. For a complete description of the
Company's accounting policies, see the consolidated financial statements
included in the Annual Report on Form 10-K for the period ended December 31,
2001.

                                        17
<PAGE>

     We believe the following critical accounting policies affect the more
significant judgments and estimates used in the preparation of our consolidated
financial statements:

REVENUE RECOGNITION

     Revenue recognition rules for software companies are very complex. We
follow very specific and detailed guidelines in measuring revenue; however,
certain judgments affect the application of our revenue policy. Revenue results
are difficult to predict, and any shortfall in revenue or delay in recognizing
revenue could cause our operating results to vary significantly from quarter to
quarter.

     The Company recognizes revenue in accordance with SOP 97-2, "Software
Revenue Recognition," as amended, and SAB No. 101 "Revenue Recognition in
Financial Statements."

     Viewpoint generates revenues through two sources: (a) software licenses and
(b) services. License revenues are generated from licensing the rights to use
our products directly to end-users and indirectly through VARs. Service revenues
are generated from fee based professional services, sales of customer support
services (maintenance contracts), and training services performed for customers
that license our products.

     License revenue includes sales of perpetual and term based licenses for
broadcasting viewpoint 3D content, and limited licenses for its digital content
library. License revenue is recognized over the term of the license in a
term-based broadcast license model and up-front in a perpetual broadcast license
model, providing that no significant vendor obligations remain and the resulting
receivable is deemed collectible by management.

     Fee-based professional services are performed on a time-and-material basis
or on a fixed-fee basis, under separate service arrangements. Revenues related
to these services are recognized on a percentage-of-completion basis in
accordance with the provisions of SOP 81-1 "Accounting for Performance of
Construction-Type and Certain Production-Type Contracts."
Percentage-of-completion for service contracts is measured principally by the
percentage of costs incurred and accrued to date for each contract to the
estimated total cost for each contract at completion. Revenues from customer
support services are recognized ratably over the term of the contract. Revenues
from training services are recognized as services are performed.

     Standard terms for license agreements call for payment within 90 days.
Probability of collection is based upon the assessment of the customer's
financial condition through the review of their current financial statements or
credit reports. For follow-on sales to existing customers, prior payment history
is also used to evaluate probability of collection. Our agreements with
customers do not contain product return rights.

     Fees from licenses sold together with fee-based professional services are
generally recognized upon delivery of the software, provided that the payment of
the license fees are not dependent upon the performance of the services, and the
services are not essential to the functionality of the licensed software. If the
services are essential to the functionality of the software, or payment of the
license fees are dependent upon the performance of the services, both the
software license and service fees are recognized under the percentage of
completion method of contract accounting.

     If the fee is not fixed or determinable, revenue is recognized as payments
become due from the customer. If a nonstandard acceptance period is required,
revenues are recognized upon the earlier of customer acceptance or the
expiration of the acceptance period.

     The Company periodically enters into nonmonetary arrangements whereby the
Company's licenses or services are exchanged for services of its customer.
Nonmonetary revenue is recognized at the estimate fair value of the services
received. Generally, nonmonetary revenues equal nonmonetary expenses; however,
due to timing, nonmonetary accounts receivable and accounts payable may result.

RECENT ACCOUNTING PRONOUNCEMENTS

     In July 2001, the FASB issued SFAS No. 143, "Accounting for Asset
Retirement Obligations." The statement requires entities to record the fair
value of a liability for an asset retirement obligation in the period
                                        18
<PAGE>

in which it is incurred. The statement is effective for fiscal years beginning
after June 15, 2002. The adoption of SFAS No. 143 is not expected to have a
material impact on the Company's financial statements.

     In May 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statements
No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical
Corrections." The statement primarily rescinds and amends certain reporting
requirements relating to gains and losses from extinguishment of debt,
accounting for intangible assets of motor carriers, and accounting for leases in
sale-leaseback transactions. The provision of the statement relating to gains
and losses on extinguishment of debt is effective for fiscal years beginning
after May 15, 2002 while the remaining provisions of the statement are effective
for transactions occurring after May 15, 2002. The adoption of SFAS No. 145 is
not expected to have a material impact on the Company's financial statements.

                        LIQUIDITY AND CAPITAL RESOURCES

     Cash, cash equivalents, and marketable securities totaled $12,768,000 at
March 31, 2002, down from $15,413,000 at December 31, 2001. Included in cash and
cash equivalents at March 31, 2002 and December 31, 2001, is $291,000 of
restricted cash which was pledged as collateral to secure a letter of credit
used for a security deposit on the Company's New York facility.

     Net cash used in operating activities of the Company totaled $2,915,000 and
$809,000 for the three months ended March 31, 2002 and 2001, respectively. Net
cash used in operating activities for the three months ended March 31, 2002
primarily resulted from a $10,984,000 net loss from continuing operations,
offset by $6,275,000 of impairment of goodwill and other intangible assets,
$1,653,000 in non-cash stock-based compensation charges and $1,159,000 in
depreciation and amortization. Net cash used in operating activities for the
three months ended March 31, 2001 primarily resulted from a $12,049,000 net loss
from continuing operations, offset by $5,713,000 in net cash provided by
discontinued operations, $4,552,000 in depreciation and amortization and
$1,743,000 in non-cash stock-based compensation charges.

     Net cash provided by investing activities totaled $1,033,000 for the three
months ended March 31, 2002, compared to net cash used in investing activities
of $4,878,000 for the three months ended March 31, 2001. Net cash provided by
investing activities for the three months ended March 31, 2002 primarily
resulted from $1,273,000 in net proceeds from sales and maturities of marketable
securities. Net cash used in investing activities for the three months ended
March 31, 2001 primarily resulted from $4,478,000 in net purchases of marketable
securities.

     Net cash provided by financing activities totaled $565,000 and $556,000 for
the three months ended March 31, 2002 and 2001, respectively, primarily
resulting from proceeds received from the exercise of stock options by the
Company's employees during the respective periods.

     Pursuant to the purchase of all of the outstanding capital stock of
Viewpoint Digital, the Company issued two contingent promissory notes to
Computer Associates each in the amount of $15,000,000. During 2001, the Company
entered into certain agreements with Computer Associates whereby Computer
Associates agreed to accept newly-issued shares of Viewpoint common stock having
a value of $4,000,000, in partial repayment of the first contingent promissory
note due June 8, 2001. In addition Computer Associates agreed to accept, at the
Company's election, either cash or newly-issued shares of Viewpoint common stock
at an issue price of $4.00 per share in repayment of any additional amounts due
under the promissory note due June 8, 2001, and the first $8,943,000 of the
$15,000,000 contingent promissory note due April 30, 2002. The amount due
Computer Associates under the promissory note due June 8, 2001 is approximately
$4,657,000 and the amount due Computer Associates under the promissory note due
April 30, 2002 is approximately $2,928,000. These amounts are reflected in due
to related parties in the Company's consolidated balance sheet at March 31, 2002

     The Company believes that its current cash, cash equivalents, and
marketable securities balances and cash provided by future operations, if any,
are sufficient to meet its operating cash flow needs and anticipated capital
expenditure requirements through at least the next twelve months. The Company
may seek additional funds before that time through public or private equity
financing or from other sources to fund our operations
                                        19
<PAGE>

and pursue our growth strategy. We have no commitment for additional financing,
and we may experience difficulty in obtaining additional financing on favorable
terms, if at all. Any financing we obtain may contain covenants that restrict
our freedom to operate our business or may have rights, preferences or
privileges senior to our common stock and may dilute our current shareholders'
ownership interest in Viewpoint.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     The Company is subject to concentration of credit risk and interest rate
risk related to cash, cash equivalents and marketable securities. The Company
does not have any derivative financial instruments as of March 31, 2002. Credit
risk is managed by limiting the amount of securities placed with any one issuer,
investing in high-quality marketable securities and securities of the U.S.
government and limiting the average maturity of the overall portfolio. The
majority of the Company's portfolio, which is classified as available-for-sale,
is composed of fixed income securities that are subject to the risk of market
interest rate fluctuations, and all of the Company's securities are subject to
risks associated with the ability of the issuers to perform their obligations
under the instruments. The Company may suffer losses in principal if forced to
sell securities, which have declined in market value due to changes in interest
rates.

                                        20
<PAGE>

                          PART II -- OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

     None

ITEM 2.  CHANGES IN SECURITIES

     None

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

     None

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     None

ITEM 5.  OTHER INFORMATION

     None

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

     None.

(b) Reports on Form 8-K

     None.

                                        21
<PAGE>

                                   SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this Report to be signed on its behalf by the
undersigned, thereunto duly authorized.

                                          VIEWPOINT CORPORATION

                                          By: /s/    ROBERT E. RICE
                                            ------------------------------------
                                                       Robert E. Rice
                                                  Director, President and
                                                  Chief Executive Officer

                                          By: /s/    ANTHONY L. PANE
                                            ------------------------------------
                                                      Anthony L. Pane
                                                 Senior Vice President and
                                                  Chief Financial Officer

Date: May 14, 2002

                                        22