<PAGE>

                                  United States
                       Securities and Exchange Commission

                             Washington, D.C. 20549

                                    FORM 10-Q

[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the Period Ended April 30, 2002.

[ ] 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 0-22651

                                   ----------

                             3DFX INTERACTIVE, INC.
             (Exact name of registrant as specified in its charter)

                                   ----------


<Table>
<S>                                                              <C>
                      CALIFORNIA                                             77-0390421
               ------------------------                               -----------------------
   (State or Other Jurisdiction of Incorporation or              (IRS Employer Identification No.)
                    Organization)
</Table>


                               4435 FORTRAN DRIVE
                           SAN JOSE, CALIFORNIA 95134
                           --------------------------
               (Address of Principal Executive Office) (Zip Code)

                         TELEPHONE NUMBER (408) 935-4400
              ----------------------------------------------------
              (Registrant's telephone number, including area code)

              ----------------------------------------------------
              (Former name, former address and former fiscal year,
                          if changed since last report)

================================================================================

         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 periods that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

Common Stock, No Par Value --- 39,799,364 shares as of July 9, 2002
================================================================================

<PAGE>
                             3DFX INTERACTIVE, INC.

                                      INDEX

<Table>
<Caption>
PART I     FINANCIAL INFORMATION                                                                     PAGE

<S>                                                                                                 <C>
            Item 1.        Financial Statements

                           Consolidated Statements of Net Liabilities in Liquidation at
                           April 30, 2002 and January 31, 2002..........................................1

                           Consolidated Statements of Changes in Net Liabilities in Liquidation for the
                           three months ended April 30, 2002 and for the period from March 27, 2001 to
                           April 30, 2001...............................................................2

                           Condensed Consolidated Statements of Discontinued Operations for the period
                           from February 1, 2001 to March 26, 2001......................................3

                           Condensed Consolidated Statement of Cash Flows of Discontinued Operations
                           for the period from February 1, 2001 to March 26,
                           2001.........................................................................4

                           Notes to Condensed Consolidated Financial Statements.........................5

            Item 2.        Management's Discussion and Analysis of Financial Condition
                           and Results of Discontinued Operations......................................10

            Item 3.        Quantitative and Qualitative Disclosure about Market Risk...................19

PART II    OTHER INFORMATION

            Item 1.        Legal Proceedings...........................................................19

            Item 2.        Changes in Securities and Use of Proceeds...................................20

            Item 3.        Defaults Upon Senior Securities.............................................20

            Item 4.        Submission of Matters to a Vote of Security Holders.........................20

            Item 5.        Other Information...........................................................20

            Item 6.        Exhibits and Reports on Form 8-K............................................20

SIGNATURES.............................................................................................21
</Table>



<PAGE>






                         PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

                    3dfx INTERACTIVE, INC. AND SUBSIDIARIES
           CONSOLIDATED STATEMENTS OF NET LIABILITIES IN LIQUIDATION
                                 (In thousands)
                                   (Unaudited)

<Table>
<Caption>
                                                                   April 30,            January 31,
                                                                     2002                  2002
                                                                 ------------          ------------
<S>                                                              <C>                   <C>
Assets

  Cash and cash equivalents                                      $        208          $      1,090
  Other current assets                                                    326                   404
  Contingent receivable (Note 1)
                                                                 ------------          ------------
    Total assets                                                 $        534          $      1,494
                                                                 ============          ============


Liabilities

  Accounts payable                                               $     23,743          $     23,632
  Estimated costs during period of liquidation (Note 1)                11,462                12,264
  Commitments and contingencies (Note 5)
                                                                 ------------          ------------
    Total liabilities                                                  35,205                35,896
                                                                 ------------          ------------
    Net liabilities in liquidation                               $     34,671          $     34,402
                                                                 ============          ============
</Table>



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




                                      -1-
<PAGE>


                             3DFX INTERACTIVE, INC.
      CONSOLIDATED STATEMENTS OF CHANGES IN NET LIABILITIES IN LIQUIDATION
                                 (In thousands)
                                  (Unaudited)




<Table>
<Caption>
                                                         Three months ended
                                                           April 30, 2002
                                                         ------------------

<S>                                                       <C>
Net assets in liquidation at February 1, 2002             $       (34,402)
                                                          ---------------
Changes in net assets in liquidation:

Selling, general and administrative expenses                         (269)
                                                          ---------------
Net liabilities in liquidation at April 30, 2002          $       (34,671)
                                                          ===============
</Table>


<Table>
<Caption>
                                                        For the period from
                                                         March 27, 2001 to
                                                          April 30, 2001
                                                        -------------------

<S>                                                     <C>
Net assets in liquidation at March 27, 2001               $        20,457
                                                          ---------------
Changes in net assets in liquidation:

   Selling, general and administrative expenses                    (3,901)
   Net gain on sale of assets held for sale                         3,227
   Decrease in deferred tax asset                                 (35,000)
                                                          ---------------
      Total changes in net assets in liquidation                  (35,674)
                                                          ---------------
Net liabilities in liquidation at April 30, 2001          $       (15,217)
                                                          ===============
</Table>



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







                                      -2-
<PAGE>


                    3DFX INTERACTIVE, INC. AND SUBSIDIARIES
          CONDENSED CONSOLIDATED STATEMENT OF DISCONTINUED OPERATIONS
                      (In thousands, except per share data)
                                   (Unaudited)

<Table>
<Caption>
                                                                                 For the period from
                                                                                 February 1, 2001 to
                                                                                    March 26, 2001
                                                                                 -------------------

<S>                                                                             <C>
Revenues                                                                          $               --
Cost of revenues                                                                                  --
                                                                                  ------------------
Gross profit                                                                                      --
                                                                                  ------------------
Operating expenses:
    Research and development                                                                      --
    Selling, general and administrative                                                        7,801
    Amortization of goodwill and intangibles                                                      --
                                                                                  ------------------
Total operating expenses                                                                       7,801
                                                                                  ------------------
Loss from discontinued operations                                                             (7,801)
Other income (expense), net                                                                      182
                                                                                  ------------------
Loss from discontinued operations before income taxes                                         (7,619)
Provision (benefit) for income taxes
                                                                                              (4,992)
                                                                                  ------------------
Net loss from discontinued operations                                             $           (2,627)
                                                                                  ==================
Net loss per share from discontinued operations:
    Basic                                                                         $            (0.07)
                                                                                  ==================
    Diluted                                                                       $            (0.07)
                                                                                  ==================
Shares used in net income (loss) per share from discontinued operations:
    Basic                                                                                     39,788
                                                                                  ==================
    Diluted                                                                                   39,788
                                                                                  ==================
</Table>


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



                                      -3-
<PAGE>



                    3DFX INTERACTIVE, INC. AND SUBSIDIARIES
   CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS OF DISCONTINUED OPERATIONS
                                 (In thousands)
                                   (Unaudited)

<Table>
<Caption>
                                                                                   For the period from
                                                                                   February 1, 2001 to
                                                                                      March 26, 2001
                                                                                   -------------------

<S>                                                                                 <C>
Cash flows from operating activities:
   Net loss from discontinued operations                                            $           (2,627)

Adjustments to reconcile net income to net cash from operating activities:
   Depreciation                                                                                     --
   Amortization                                                                                     --
   Stock compensation                                                                               --
   Decrease in allowance for doubtful accounts                                                  (5,573)
   Changes in assets and liabilities:
      Accounts receivable                                                                       10,725
      Inventory                                                                                    183
      Deferred tax asset                                                                            --
      Other assets                                                                                 544
      Accounts payable                                                                              --
      Accrued and other liabilities                                                            (11,394)
                                                                                    ------------------
         Net cash used in discontinued operating activities                                     (8,142)
                                                                                    ------------------
Cash flows from investing activities:
   Sales of short-term investments                                                                 188
   Purchases of property and equipment                                                              --
         Net cash provided by investment activities                                                188
                                                                                    ------------------
Cash flows from financing activities:
   Proceeds from issuance of common stock, net                                                      --
   Principal payments of capitalized lease obligations, net                                         --
                                                                                    ------------------
         Net cash provided by financing activities                                                  --
                                                                                    ------------------
Net (decrease) increase in cash and cash equivalents                                            (7,954)
Cash and cash equivalents at beginning of period                                                 9,391
                                                                                    ------------------
Cash and cash equivalents at end of period                                          $            1,437
                                                                                    ==================
</Table>


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



                                      -4-
<PAGE>


                             3DFX INTERACTIVE, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1 - The Company and its Significant Accounting Policies:

3dfx

     3dfx Interactive, Inc. ("3dfx" or "the Company") was incorporated in
California on August 24, 1994. 3dfx developed high performance, cost-effective
graphics chips, graphics boards, software and related technology that enable an
interactive and realistic 3D experience across multiple hardware platforms. 3dfx
has subsidiaries in the United States, Mexico, and other key markets in the
world. The unaudited condensed consolidated financial statements include the
financial statements of 3dfx and its wholly owned subsidiaries. All significant
intercompany transactions and accounts have been eliminated.

     The unaudited condensed consolidated financial statements included herein
have been prepared by 3dfx pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information or footnote disclosures
normally included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted pursuant to such
rules and regulations. In the opinion of 3dfx, the accompanying unaudited
condensed consolidated financial statements contain all adjustments, consisting
only of normal recurring adjustments, necessary to present fairly the financial
information included therein. While 3dfx believes that the disclosures are
adequate to make the information not misleading, it is suggested that these
financial statements be read in conjunction with the audited financial
statements and accompanying notes included in 3dfx's Annual Report on Form 10-K
for the fiscal year ended January 31, 2002 as filed with the Securities and
Exchange Commission.

     As described below, on March 27, 2001, 3dfx's shareholders approved
proposals to liquidate, wind-up and dissolve 3dfx pursuant to a plan of
dissolution. 3dfx is proceeding to wind-up its affairs and dissolve.
Accordingly, all activities of 3dfx as of and since March 27, 2001 are presented
under the liquidation basis of accounting. Under the liquidation basis of
accounting, assets are stated at their estimated net realizable values and
liabilities are stated at their anticipated settlement amount, if reasonably
estimable. See "Activities While in Liquidation" below.

Nvidia Asset Sale Terms

     In the fall of 2000, 3dfx began experiencing financial difficulties due in
part to substantially reduced demand in the retail channel for its products.
This reduced demand is attributable to a number of factors, including, in part,
its failure to introduce products in a timely manner and from disappointing
customer response to its existing products, as well as reduced demand in the
retail channel in general and the add-in graphics segment in particular. In
addition, 3dfx's high research and development costs and substantial debt
burden, together with the loss of several large customers due to 3dfx's May 1999
acquisition of STB Systems, Inc. and its inability to refinance its debt on
commercially reasonable terms, aggravated its financial difficulties. After
extensive exploration and evaluation of various strategic alternatives, the 3dfx
board of directors concluded that the liquidation, winding up and dissolution of
3dfx provided the best protection to 3dfx's creditors and was in the best
interests of its shareholders.

     On December 15, 2000, 3dfx entered into an asset purchase agreement with
Nvidia Corporation ("Nvidia") and a subsidiary of Nvidia ("Nvidia Sub") under
which Nvidia Sub would acquire certain of 3dfx's assets, including its core
graphics processor assets. Under the terms of the asset purchase agreement,
Nvidia agreed to pay 3dfx $70.0 million in cash and 2,000,000 shares (on a
post-split basis) of registered Nvidia common stock, subject to the satisfaction
of certain conditions specified in the asset purchase agreement as described
below. Upon signing the asset purchase agreement, Nvidia loaned to 3dfx $15.0
million in cash for working capital.

     The asset sale to Nvidia Sub was approved by 3dfx shareholders on March 27,
2001, and on April 18, 2001 substantially all of 3dfx's assets were sold to
Nvidia Sub. Upon closing, 3dfx received $55.0 million in cash, which amount was
net of repayment of the $15.0 million cash loan 3dfx received upon signing the
asset purchase



                                      -5-
<PAGE>
agreement. In addition, under the terms of the asset purchase agreement, 3dfx
and Nvidia Sub caused the pending patent litigation between the parties to be
dismissed with prejudice. Under the terms of the asset purchase agreement, 3dfx
may receive part or all of a one-time post-closing cash payment of up to $25.0
million upon its request if it is not in breach of the asset purchase agreement,
it has expended all or substantially all of the $70.0 million cash consideration
in payment of its liabilities and determines in good faith that (i) the
remaining portion of the cash consideration previously received by it is not
sufficient to pay its remaining liabilities, and (ii) such remaining liabilities
could and would be satisfied if 3dfx received the post-closing cash payment and
applied it to the payment of such liabilities, and if Nvidia Sub does not
determine in good faith that the requested amount would not permit 3dfx to pay
in full its remaining liabilities. In the event that 3dfx were to receive the
post-closing cash payment, the 2,000,000 shares of Nvidia common stock
comprising the remaining consideration otherwise payable to 3dfx under the asset
purchase agreement will be reduced by the number of shares equal to the quotient
determined by dividing the amount of the post-closing cash payment by $25. Based
on 3dfx's net liabilities balance of $34.7 million at April 30, 2002, 3dfx made
arrangements to obtain the Series B Financing because it does not currently
believe that it will satisfy all of the conditions to receipt of the
post-closing cash payment from Nvidia Sub.

     The 2,000,000 shares of Nvidia common stock will only become deliverable to
3dfx upon satisfaction of certain conditions specified in the asset purchase
agreement, including the completion of the winding up of the business of 3dfx
pursuant to 3dfx's plan of dissolution, and 3dfx's certification that (i) all
liabilities of 3dfx and its subsidiaries have been paid in full or otherwise
provided for and (ii) 3dfx has or will be validly dissolved. In the event the
remaining consideration from Nvidia is not paid, 3dfx will have to explore other
options, including filing for bankruptcy. As a result of the contingencies
described above, the contingent receivable and related tax expense on the gain
have not been recorded in the accompanying consolidated statement of net
liabilities in liquidation as of April 30, 2002. The ultimate total of the value
of Nvidia stock received by 3dfx, if any, is dependent on the number and market
value of shares received given the conditions described above.

Series B Preferred Stock Financing

     On June 13, 2002, 3dfx entered into a Series B Preferred Stock Purchase
Agreement with SF Capital Partners Ltd. whereby SF Capital has agreed to invest
between $25 and $35 million in 3dfx in exchange for shares of 3dfx's Series B
Preferred Stock (the "Series B Financing"). The amount of the investment will be
based on the sum at closing of 3dfx's fixed and determinable liabilities,
maximum reasonably known undeterminable liabilities and anticipated expenses
reasonably necessary to complete the liquidation, winding-up and dissolution of
3dfx. The agreement with SF Capital provides that once the amount of all of
3dfx's liabilities is determined, or if some liabilities are not determinable
then the maximum amount of all undetermined liabilities shall be reasonably
known to 3dfx and SF Capital, and subject to the satisfaction of certain other
specified conditions, then SF Capital will place the purchase price for the
shares of Series B Preferred Stock into escrow pending closing. The purchase
price will be released to 3dfx from escrow, and the closing of the Series B
Financing will occur, upon the satisfaction of conditions that 3dfx and SF
Capital specify in the escrow agreement. The number of shares of Series B
Preferred Stock of 3dfx issuable to SF Capital at closing will be equal to the
quotient derived by dividing (x) the sum of the investment amount and a
specified percent of the investment amount by (y) the average closing price of
Nvidia common stock for the five trading days preceding the closing. The
"specified percentage of the investment amount" referred to in the preceding
formula ranges from 25% to 40%, and varies based on the price of Nvidia common
stock preceding the closing (the higher the price of Nvidia common stock, the
higher the specified percentage of the investment amount").

     The Series B Preferred Stock will not be entitled to dividends, subject to
redemption or conversion, and will have no voting rights, but it will have
priority for payment upon the liquidation, winding-up or dissolution of 3dfx. If
3dfx is in the process of liquidating, dissolving or winding up, immediately
upon its receipt of 500,000 or more shares of Nvidia common stock, 3dfx shall
distribute to the holders of the Series B Preferred Stock, at 3dfx's election,
either (i) $90 cash per share of Series B Preferred Stock or (ii) one share of
Nvidia stock per share of Series B Preferred Stock (the "Liquidation
Preference"). In the meantime, the prior written consent of the holders of not
less than a majority of the outstanding shares of Series B Preferred Stock is
required for 3dfx to make any dividends, distributions or redemptions on any
other securities, or for 3dfx to issue any debt or equity securities, or





                                      -6-
<PAGE>

for 3dfx to enter into any merger, sale of shares of capital stock having voting
power with respect to 35% or more of its outstanding capital stock, or any
transaction in which all or substantially all of the assets of 3dfx are sold.
The holders of Series B Preferred Stock will have certain other rights designed
to protect their investment in 3dfx. The stock purchase agreement with SF
Capital is terminable if the funding amount exceeds the $35 million level or
falls under the $25 million level, if the Nvidia closing price is equal to or
less than $26, if the transaction fails to close within one year, if 3dfx is in
material default of the agreement or if the Nvidia common stock is delisted from
the Nasdaq National Market. In addition, 3dfx sought the Series B Financing
because it does not currently believe that it will satisfy all of the conditions
to receipt of the post-closing cash payment provided for under the Nvidia asset
purchase agreement. Nvidia's stock price is currently less than $26. There can
be no assurance that the Series B Financing will be successfully closed. In the
event that the Series B Financing does not close, 3dfx will have to explore
other options, including filing for bankruptcy.

Liquidation, Winding Up and Dissolution

     On December 15, 2000, the board of directors of 3dfx also approved a plan
of dissolution and on March 27, 2001 this plan of dissolution was approved by
3dfx's shareholders. On March 30, 2001, 3dfx filed a certificate of election to
liquidate, wind up and dissolve with the California Secretary of State's office.
3dfx is proceeding to wind up its affairs and is no longer operating or
generating revenues in the normal course of business. Accordingly, all of the
activities of 3dfx have been presented on a liquidation basis of accounting.

     At this time, 3dfx cannot determine if there will be any assets remaining
after paying for, or providing for the payment of, 3dfx's liquidation expenses
and all of its and its subsidiaries' debts and liabilities, as well as the
distribution of the Liquidation Preference to the holders of the Series B
Preferred Stock. 3dfx believes that it will shortly be in a position to
voluntarily petition a California court to take jurisdiction over the final
steps of its winding up. In connection with this judicial process, 3dfx expects
that it will be able to finally determine the total amount of its liabilities,
including the maximum amount of its undeterminable liabilities, and satisfy the
conditions to its receipt of the shares of Nvidia stock. However, there can be
no assurance as to the total amount of 3dfx's liabilities or whether it will be
able to close the Series B Financing and satisfy the conditions to receiving the
shares of Nvidia stock. If any of these or other matters cannot be
satisfactorily resolved, 3dfx will have to explore other options, including
filing for bankruptcy.

     3dfx expects to continue to incur certain administrative and other costs
associated with winding up its affairs. The amount of unknown or contingent
liabilities cannot be quantified and could decrease or eliminate any remaining
assets available for distribution to 3dfx's common shareholders. Further, if
3dfx or its subsidiaries are subject to any contingent liabilities, this could
require that it establish reserves that could delay any distribution to 3dfx
common shareholders. Because of the uncertainties as to the settlement amount of
3dfx's and its subsidiaries' debts and liabilities (including tax liabilities),
as well as the volatility in the market price of Nvidia's stock, 3dfx cannot at
this time determine the timing or amount of distributions that may be made to
its common shareholders, if any. Only if there are assets remaining after the
payment of all debts and liabilities, and the distribution of the Liquidation
Preference, will 3dfx common shareholders receive a distribution of those
assets.

     3dfx has substantially reduced its costs in order to conserve its
resources. These cost-cutting measures included the termination of virtually all
employees, reduction in leased space and other efforts to reduce non-essential
expenses. During the fiscal year 2002, 3dfx also continued to liquidate its
remaining assets, negotiate with third parties for resolutions of various
litigation matters that would be agreeable to all parties involved, and to reach
settlements with its vendors in reduction of its accounts payable, as well as to
reach mutually satisfactory settlements with the lessors of its facilities and
equipment leases. 3dfx provided manufacturing services to third parties to help
cover the overhead associated with its Juarez, Mexico manufacturing facility
until its lease of that facility was terminated in April 2002. The sales and
costs of sales related to these operations are recorded as other income and
expense on the condensed consolidated statement of discontinued operations for
the period from February 1, 2001 to March 26, 2001 and as selling, general, and
administrative expense for the three months ended April 30, 2002 and for the
period from March 27, 2001 to April 30, 2001.





                                      -7-
<PAGE>

Activities While in Liquidation

     During the three months ended April 30, 2002, 3dfx continued to negotiate
with third parties for resolutions of various litigation matters that would be
agreeable to all parties involved, and to reach settlements with its vendors in
reduction of its accounts payable, as well as to reach mutually satisfactory
settlements with the lessors to its facilities and various equipment leases. Any
remaining inventory and other assets held for sale have been written down to
their net realizable value, most of which equals zero. As 3dfx is in
liquidation, these remaining assets may be sold. 3dfx believes that any gains on
such sales that may be realized will be immaterial.

     At April 30, 2002, 3dfx was still in negotiations to settle certain
remaining leases under which it has contractual obligations. However, at April
30, 2002, 3dfx had total future lease obligations of $6.1 million and lease
termination costs of $4.0 million in the current year, all of which has been
accrued.

     During the three months ended April 30, 2002, 3dfx incurred selling,
general and administrative costs of $269,000, which were comprised of personnel
expenses, legal and other professional fees, current period facilities expense,
lease payments and lease termination expense.

     Changes in net liabilities for the period from March 27, 2001 to April 30,
2001 were a result of selling, general and administrative expenses of $3.9
million, a decrease in the deferred tax asset of $35.0 million and the net gain
on sale of assets to Nvidia Sub of $3.2 million, which was comprised of the
following: (a) a gain on the sale of inventory and other assets held for sale to
Nvidia Sub of $15.0 million, which was comprised of the purchase of Nvidia Sub
of certain inventory, fixed assets and intangible assets with net book values of
$55.5 million offset by proceeds of $70.0 million and (b) losses of $11.8
million on sale of impairment of inventory and other assets held for sale.

     At April 30, 2002, 3dfx had net liabilities in liquidation of $34.7
million. In light of the amount of 3dfx's liabilities, as well as contingencies
relating to unknown or contingent liabilities and Nvidia's delivery of the
shares of Nvidia common stock provided for in the Nvidia asset purchase
agreement, there can be no assurance that 3dfx will have any assets available
for distribution to its common shareholders.


Note 2 - Balance Sheet Components (in thousands):

Estimated Costs During Period of Liquidation:

<Table>
<Caption>
                                                April 30,            January 31,
                                                  2002                  2002
                                              ------------          ------------
<S>                                           <C>                   <C>
Accrued salaries, wages and benefits          $        480          $        680
Accrued leases payable                              10,062                10,563
Other accrued liabilities                              920                 1,021
                                              ------------          ------------
                                              $     11,462          $     12,264
                                              ============          ============
</Table>


Note 3 - Net Loss Per Share:

     Basic net loss per share is computed using the weighted average number of
common shares outstanding during the periods. Diluted net loss per share is
computed using the weighted average number of common and potentially dilutive
common shares during the periods presented.




                                      -8-
<PAGE>

     Diluted loss per share was the same as basic loss per share for the period
from February 1, 2001 to March 26, 2001, and options to purchase approximately
3,276,380 shares of common stock were outstanding but not included in the
calculation because they were anti-dilutive.

Note 4 - Comprehensive Loss:

     Total comprehensive loss for the period February 1, 2001 to March 26, 2001
was $3.4 million, comprised of $700,000 from an unrealized loss on investment in
3Dlabs and net loss from discontinued operations of $2.7 million.

Note 5 - Commitments and Contingencies:

Leases

     3dfx leases, under noncancelable operating leases, certain of its
facilities and equipment. There were no capital leases outstanding as of April
30, 2002. During fiscal 2002, the Company terminated several of its operating
leases. At April 30, 2002, 3dfx was still in negotiations to settle certain
remaining leases under which it has contractual obligations. However, at April
30, 2002, 3dfx had total future lease obligations of $10.1 million, all of which
has been accrued. The remaining operating lease agreements existing at April 30,
2002, expire at various dates through 2007.

Contingencies

     3dfx is a party to the following legal proceedings involving certain
collection matters against 3dfx. 3dfx does not dispute that certain amounts are
owed to the parties that are pursuing these collection matters, but is
attempting to seek resolution of payment terms that are mutually acceptable to
the parties involved in each of these matters. There can be no assurance that
such resolutions will be achieved.

<Table>
<Caption>
                                                                                               Factual Basis and
     Adverse Party                   Court                    Date Instituted                    Relief Sought
     -------------                   -----                    ---------------                  -----------------

<S>                            <C>                          <C>                           <C>
Aavid Thermalloy                 44th Judicial                November 8, 2000            Collection suit on unpaid
                               District of Texas                                                  invoices.

Micron Design Systems,         Santa Clara County             August 17, 2000             Collection suit on unpaid
Inc.                             Superior Court                                                   contract.

Quickturn Design               Santa Clara County            January 25, 2001             Collection suit on unpaid
Systems, Inc.                    Superior Court                                                   contract.

Cadence Design Systems,        Santa Clara County            January 25, 2001             Collection suit on unpaid
Inc.                             Superior Court                                                   contract.

California Micro               Santa Clara County           September 24, 2001            Collection suit on unpaid
Devices, Inc.                    Superior Court                                                   contract.

Siliconware USA, Inc.          Santa Clara County              May 21, 2001               Collection suit on unpaid
                                 Superior Court                                                   contract.

Synopsis, Inc.                 Santa Clara County             August 20, 2001             Collection suit on unpaid
                                 Superior Court                                                   contract.
</Table>




                                      -9-
<PAGE>


      In addition to these collection disputes, 3dfx is a party to litigation
filed February 23, 2001 by Worldcom, Inc. in Dallas County on an open account
for telephone services. The amount of damages stated in the petition was
$1,389,000 plus interest and attorney's fees. Trial is set for October 14, 2002.
The parties engaged in nonbinding mediation on June 24, 2002, but no resolution
was achieved. Initial depositions have been conducted. 3dfx disputes Worldcom's
claims and intends to vigorously defend itself in this matter.

     3dfx is also involved in litigation filed against it in the 192nd District
Court on February 11, 2002 by Fortran Trust, 3dfx's lessor for its former
headquarters in San Jose, California. The landlord filed for breach of lease in
a tenant in possession action based on 3dfx's failure to pay rental amounts that
are delinquent. 3dfx is seeking to negotiate a settlement of its lease
obligations owed to Fortran Trust. The lessor also filed for and received from
the court a Writ of Attachment on March 8, 2002. The lessor is presently
attempting to schedule a summary judgment hearing. Finally, a default judgment
was entered in favor of CarrAmerica, 3dfx's lessor for its offices in Austin,
Texas, on May 20, 2002 resulting from a lawsuit filed April 18, 2002 in the
261st Judicial District Court of Travis County, Texas. The judgment is now
final. CarrAmerica may take steps to enforce that judgment against 3dfx. 3dfx is
seeking to negotiate a settlement of its lease obligations owed to CarrAmerica.

     3dfx may also be a party to various other lawsuits. Although the amount of
any liability that could arise with respect to these other proceedings cannot
be predicted accurately, 3dfx believes that any liability that might result
from these other claims will not have a material adverse effect on its
financial position.

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

     This report contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. Any statements contained in this document, including
without limitation statements to the effect that 3dfx or its management
"believes," "expects," "anticipates," "plans," "may," "will," "projects,"
"continues," or "estimates," or statements concerning "potential," or
"opportunity" or other variations thereof or comparable terminology or the
negative thereof, that are not statements of historical fact should be
considered forward-looking statements. These forward-looking statements are
based on current expectations and entail various risks and uncertainties that
could cause actual results to differ materially from those projected in the
forward-looking statements. Some of such risks and uncertainties are set forth
below under "Risk Factors."

OVERVIEW

     3dfx developed high performance, cost-effective graphics chips, graphics
boards, software and related technology that enabled an interactive and
realistic 3D experience across multiple hardware platforms, but is now in the
process of winding up its business. As discussed below, on March 27, 2001,
3dfx's shareholders approved proposals to liquidate, wind up and dissolve 3dfx
pursuant to a plan of dissolution and to sell certain of its assets to Nvidia US
Investment Company ("Nvidia Sub"), a wholly owned subsidiary of Nvidia
Corporation ("Nvidia"). 3dfx is continuing to wind up its affairs and dissolve.
Accordingly, all activities of 3dfx subsequent to March 27, 2001 are presented
on a liquidation basis in the accompanying consolidated financial statements.
Additionally, 3dfx's common stock was delisted from the NASDAQ National Market
effective May 16, 2001.

NVIDIA ASSET SALE TERMS

     In the fall of 2000, 3dfx began experiencing financial difficulties due in
part to substantially reduced demand in the retail channel for its products.
This reduced demand is attributable to a number of factors, including, in part,
its failure to introduce products in a timely manner and from disappointing
customer response to its existing products, as well as reduced demand in the
retail channel in general and the add-in graphics segment in particular. In
addition, 3dfx's high research and development costs and substantial debt
burden, together with the loss of several large customers due to 3dfx's May 1999
acquisition of STB Systems, Inc. and its inability to refinance its debt on
commercially reasonable terms, aggravated its financial difficulties. After
extensive exploration and





                                      -10-
<PAGE>

evaluation of various strategic alternatives, the 3dfx board of directors
concluded that the liquidation, winding up and dissolution of 3dfx provided the
best protection to 3dfx's creditors and was in the best interests of its
shareholders.

     On December 15, 2000, 3dfx entered into an asset purchase agreement with
Nvidia and Nvidia Sub under which Nvidia Sub would acquire certain of 3dfx's
assets, including its core graphics processor assets. Under the terms of the
asset purchase agreement, Nvidia Sub agreed to pay 3dfx $70.0 million in cash
and 2,000,000 shares of registered Nvidia common stock (after giving effect to a
recent Nvidia stock split), subject to the satisfaction of certain conditions
specified in the asset purchase agreement as described below. Upon signing the
asset purchase agreement, Nvidia Sub loaned to 3dfx $15.0 million in cash for
working capital.

     The asset sale to Nvidia Sub was approved by 3dfx shareholders on March 27,
2001, and on April 18, 2001 substantially all of 3dfx's assets were sold to
Nvidia Sub. Upon closing, 3dfx received $55.0 million in cash, which amount was
net of repayment of the $15.0 million cash loan 3dfx received upon signing the
asset purchase agreement. In addition, under the terms of the asset purchase
agreement, 3dfx and Nvidia Sub caused the pending patent litigation between the
parties to be dismissed with prejudice. Under the terms of the asset purchase
agreement, 3dfx may receive part or all of a one-time post-closing cash payment
of up to $25.0 million upon its request if it is not in breach of the asset
purchase agreement, it has expended all or substantially all of the $70.0
million cash consideration in payment of its liabilities and determines in good
faith that (i) the remaining portion of the cash consideration previously
received by it is not sufficient to pay its remaining liabilities, and (ii) such
remaining liabilities could and would be satisfied if 3dfx received the
post-closing cash payment and applied it to the payment of such liabilities, and
if Nvidia Sub does not determine in good faith that the requested amount would
not permit 3dfx to pay in full its remaining liabilities. In the event that 3dfx
were to receive the post-closing cash payment, the 2,000,000 shares of Nvidia
common stock comprising the remaining consideration otherwise payable to 3dfx
under the asset purchase agreement will be reduced by the number of shares equal
to the quotient determined by dividing the amount of the post-closing cash
payment by $25. Based on 3dfx's net liabilities balance of $34.7 million at
April 30, 2002, 3dfx made arrangements to obtain the Series B Financing because
it does not currently believe that it will satisfy all of the conditions to
receipt of the post-closing cash payment from Nvidia Sub.

     The 2,000,000 shares of Nvidia common stock will only become deliverable to
3dfx upon satisfaction of certain conditions specified in the asset purchase
agreement, including the completion of the winding up of the business of 3dfx
pursuant to 3dfx's plan of dissolution, and 3dfx's certification that (i) all
liabilities of 3dfx and its subsidiaries have been paid in full or otherwise
provided for and (ii) 3dfx has or will be validly dissolved. In the event the
remaining consideration from Nvidia is not paid, 3dfx will have to explore other
options, including filing for bankruptcy. The ultimate total value of the Nvidia
stock received by 3dfx, if any, is dependent on the number and market value of
shares received given the conditions described above.

SERIES B PREFERRED STOCK FINANCING

     On June 13, 2002, 3dfx entered into a Series B Preferred Stock Purchase
Agreement with SF Capital Partners Ltd. whereby SF Capital agreed to invest
between $25 and $35 million in 3dfx in exchange for shares of 3dfx's Series B
Preferred Stock (the "Series B Financing"). The amount of the investment will be
based on the sum at closing of 3dfx's fixed and determinable liabilities,
maximum reasonably known undeterminable liabilities and anticipated expenses
reasonably necessary to complete the liquidation, winding-up and dissolution of
3dfx. The agreement with SF Capital provides that once the amount of all of
3dfx's liabilities is determined, or if some liabilities are not determinable
then the maximum amount of all undetermined liabilities shall be reasonably
known to 3dfx and SF Capital, and subject to the satisfaction of certain other
specified conditions, then SF Capital will place the purchase price for the
shares of Series B Preferred Stock into escrow pending closing. The purchase
price will be released to 3dfx from escrow, and the closing of the Series B
Financing will occur, upon the satisfaction of conditions that 3dfx and SF
Capital specify in the escrow agreement. The number of shares of Series B
Preferred Stock of 3dfx issuable to SF Capital at closing will be equal to the
quotient derived by dividing (x) the sum of the investment amount and a
specified percent of the investment amount by (y) the average closing price of
Nvidia common stock for the five trading days preceding the closing. The
"specified percentage of the





                                      -11-
<PAGE>

investment amount" referred to in the preceding formula ranges from 25% to 40%,
and varies based on the price of Nvidia common stock preceding the closing (the
higher the price of Nvidia common stock, the higher the "specified percentage of
the investment amount").

     The Series B Preferred Stock will not be entitled to dividends, subject to
redemption or conversion, and will have no voting rights, but it will have
priority for payment upon the liquidation, winding-up or dissolution of 3dfx. If
3dfx is in the process of liquidating, dissolving or winding up, immediately
upon its receipt of 500,000 or more shares of Nvidia common stock, 3dfx shall
distribute to the holders of the Series B Preferred Stock, at 3dfx's election,
either (i) $90 cash per share of Series B Preferred Stock or (ii) one share of
Nvidia stock per share of Series B Preferred Stock (the "Liquidation
Preference"). In the meantime, the prior written consent of the holders of not
less than a majority of the outstanding shares of Series B Preferred Stock is
required for 3dfx to make any dividends, distributions or redemptions on any
other securities, or for 3dfx to issue any debt or equity securities, or for
3dfx to enter into any merger, sale of shares of capital stock having voting
power with respect to 35% or more of its outstanding capital stock, or any
transaction in which all or substantially all of the assets of 3dfx are sold.
The holders of Series B Preferred Stock will have certain other rights designed
to protect their investment in 3dfx. The stock purchase agreement with SF
Capital is terminable if the funding amount exceeds the $35 million level or
falls under the $25 million level, if the Nvidia closing price is equal to or
less than $26, if the transaction fails to close within one year, if 3dfx is in
material default of the agreement or if the Nvidia common stock is delisted from
the Nasdaq National Market. Nvidia's stock price is currently less than $26.
There can be no assurance that the Series B Financing will be successfully
closed. In the event that the Series B Financing does not close, 3dfx will have
to explore other options, including filing for bankruptcy. See "Risk Factors -
3dfx may not be able to satisfy its debt obligations and may file or be forced
into backruptcy by its creditors."

LIQUIDATION, WINDING UP AND DISSOLUTION

     On December 15, 2000, the board of directors of 3dfx also approved a plan
of dissolution and on March 27, 2001 this plan of dissolution was approved by
3dfx's shareholders. On March 30, 2001, 3dfx filed a certificate of election to
liquidate, wind up and dissolve with the California Secretary of State's office.
3dfx is proceeding to wind up its affairs and is no longer operating or
generating revenues in the normal course of business.

     At this time, 3dfx cannot determine if there will be any assets remaining
after paying for, or providing for the payment of, 3dfx's liquidation expenses
and all of its and its subsidiaries' debts and liabilities, as well as the
distribution of the Liquidation Preference to the holders of the Series B
Preferred Stock. 3dfx believes that it will shortly be in a position to
voluntarily petition a California court to take jurisdiction over the final
steps of its winding up. In connection with this judicial process, 3dfx expects
that it will be able to finally determine the total amount of its liabilities,
including the maximum amount of its undeterminable liabilities, and also expects
that it will be able to close the Series B Financing and satisfy the conditions
to its receipt of the shares of Nvidia stock. However, there can be no assurance
as to the total amount of 3dfx's liabilities or whether it will be able to close
the Series B Financing or satisfy the conditions to receiving the shares of
Nvidia stock. If any of these or other matters cannot be satisfactorily
resolved, 3dfx will have to explore other options, including filing for
bankruptcy.

     3dfx expects to continue to incur certain administrative and other costs
associated with winding up its affairs. The amount of unknown or contingent
liabilities cannot be quantified and could decrease or eliminate any remaining
assets available for distribution to 3dfx's common shareholders. Further, if
3dfx or its subsidiaries are subject to any contingent liabilities, this could
require that it establish reserves that could delay any distribution to 3dfx
common shareholders. Because of the uncertainties as to the settlement amount of
3dfx's and its subsidiaries' debts and liabilities (including tax liabilities),
as well as the volatility in the market price of Nvidia's stock, 3dfx cannot at
this time determine the timing or amount of distributions that may be made to
its common shareholders, if any. Only if there are assets remaining after the
payment of all debts and liabilities, and the distribution of the Liquidation
Preference, will 3dfx common shareholders receive a distribution of those
assets.

     3dfx has substantially reduced its costs in order to conserve its
resources. These cost-cutting measures included the termination of virtually all
employees, reduction in leased space and other efforts to reduce non-essential
expenses. During fiscal 2002, 3dfx also continued to liquidate its remaining
assets, negotiate with third





                                      -12-
<PAGE>

parties for resolutions of various litigation matters that would be agreeable to
all parties involved, and to reach settlements with its vendors in reduction of
its accounts payable, as well as to reach mutually satisfactory settlements with
the lessors of its facilities and equipment leases. 3dfx provided manufacturing
services to third parties to help cover the overhead associated with its Juarez,
Mexico manufacturing facility until its lease of that facility was terminated in
April 2002. The sales and costs of sales related to these operations are
recorded as other income and expense on the condensed consolidated statement of
discontinued operations for the period from February 1, 2001 to March 26, 2001,
and as selling, general, and administrative expense for the three months ended
April 30, 2002 and for the period from March 27, 2001 to April 30, 2001.

ACTIVITIES WHILE IN LIQUIDATION

     During the three months ended April 30, 2002, 3dfx continued to negotiate
with third parties for resolutions of various litigation matters that would be
agreeable to all parties involved, and to reach settlements with its vendors in
reduction of its accounts payable, as well as to reach mutually satisfactory
settlements with the lessors to its facilities and various equipment leases. Any
remaining inventory and other assets held for sale have been written down to
their net realizable value, most of which equals zero. As 3dfx is in
liquidation, these remaining assets may be sold. 3dfx believes that any gains on
such sales that may be realized will be immaterial.

     At April 30, 2002, 3dfx was still in negotiations to settle certain
remaining leases under which it has contractual obligations. However, at April
30, 2002, 3dfx had total future lease obligations of $6.1 million and lease
termination costs of $4.0 million in the current year, all of which has been
accrued.

     At April 30, 2002, 3dfx had net liabilities in liquidation of $34.7
million. In light of the amount of 3dfx's liabilities, as well as contingencies
relating to unknown or contingent liabilities and Nvidia's delivery of the
shares of Nvidia common stock provided for in the Nvidia asset purchase
agreement, there can be no assurance that 3dfx will have any assets available
for distribution to its common shareholders.

STATEMENT OF CHANGES IN NET LIABILITIES IN LIQUIDATION

     During the three months ended April 30, 2002, 3dfx incurred selling,
general and administrative costs of $269,000, which were comprised of personnel
expenses, legal and other professional fees, current period facilities expense,
lease payments and lease termination expense.

     Changes in net liabilities for the period from March 27, 2001 to April 30,
2001 were a result of selling, general and administrative expenses of $3.9
million, a decrease in the deferred tax asset of $35.0 million and the gain on
sale of assets to Nvidia Sub of $3.2 million, which was comprised of the
following: (a) a gain on the sale of inventory and other assets held for sale to
Nvidia Sub of $15.0 million, which was comprised of the purchase by Nvidia Sub
of certain inventory, fixed assets and intangible assets with net book values of
$55.5 million offset by proceeds of $70.0 million and (b) losses of $11.8
million on sale of an impairment of inventory and other assets held for sale.

     3dfx's receipt of the shares of Nvidia common stock provided for in the
Nvidia asset purchase agreement has not been recorded in the accompanying
consolidated statement of net liabilities in liquidation, because obtaining the
cash necessary to pay 3dfx's liabilities, which 3dfx intends to accomplish
through the Series B Financing, is a condition to 3dfx being entitled to receive
the shares of Nvidia stock.

RESULTS OF DISCONTINUED OPERATIONS

For the period from February 1, 2001 to March 26, 2001

     Revenues. 3dfx did not have any revenues for the period from February 1,
2001 to March 26, 2001.





                                      -13-
<PAGE>

     Research and Development. Research and development expenses consist
primarily of compensation and other expenses related to research and development
personnel, occupancy costs of research and development facilities, depreciation
of capital equipment used in product development and engineering costs paid to
3dfx's foundries in connection with manufacturing start-up of new products. 3dfx
did not incur any research and development expenses for the period from February
1, 2001 to March 26, 2001.

     Selling, General and Administrative. Selling, general and administrative
expenses include compensation and benefits for sales, marketing, finance and
administration personnel, commissions paid to independent sales representatives,
tradeshow, advertising and other promotional expenses and facilities expenses.
Selling, general and administrative expenses were $7.8 million for the period
from February 1, 2001 to March 26, 2001.

     Amortization of Goodwill and Other Intangibles. For the period from
February 1, 2001 to March 26, 2001, 3dfx did not record any amortization
relating to goodwill or intangibles.

     Other Income (Expense), Net. Other income (expense), net was $182,000 for
the period from February 1, 2001 to March 26, 2001.

LIQUIDITY AND CAPITAL RESOURCES

     As of April 30, 2002, 3dfx had cash and cash equivalents of $208,000.

     On April 18, 2001, 3dfx completed the sale of substantially all of its
assets to Nvidia Sub and at the closing received cash in the net amount of $55
million pursuant to an asset purchase agreement. After establishing a reserve
for the winding up of its affairs, 3dfx used the remaining proceeds received
from the asset sale to Nvidia Sub to pay a significant portion of its and its
subsidiaries' known and determinable debts and liabilities. 3dfx is seeking to
liquidate its remaining assets.

     3dfx's principal anticipated liquidity requirements involve reaching
settlements with its vendors in reduction of its accounts payable, as well as
reaching mutually satisfactory settlements of its contractual dispute with
Worldcom, Inc. and with the lessors to its remaining facilities and equipment
leases. 3dfx is also seeking to assign or sublease its leased properties. In
addition, unknown or contingent liabilities could require substantial cash
resources. Management cannot reasonably estimate the amount of future
obligations at this time. 3dfx is seeking to address each of the foregoing
liquidity requirements, as well as the continuing expenses associated with the
winding up of its business, with its remaining cash and other resources.

     On June 13, 2002, 3dfx entered into a Series B Preferred Stock Purchase
Agreement with SF Capital Partners Ltd. whereby SF Capital has agreed to invest
between $25 and $35 million in 3dfx in exchange for shares of 3dfx's Series B
Preferred Stock (the Series B Financing). The closing of the Series B Financing
is subject to a number of conditions, some of which are beyond the control of
3dfx. 3dfx made arrangements to obtain the Series B Financing in order to
provide the cash funding necessary to pay its liabilities and otherwise satisfy
the requirements to the delivery of the Nvidia stock to 3dfx under the Nvidia
asset purchase agreement. In addition, 3dfx sought the Series B Financing
because it does not currently believe that it will satisfy all of the conditions
to receipt of the post-closing cash payment provided for under the Nvidia asset
purchase agreement. There can be no assurance that the Series B Financing will
be successfully closed. In the event the Series B Financing does not close, 3dfx
will have to explore other options, including filing for bankruptcy. See "Risk
Factors - 3dfx may not be able to satisfy its debt obligations and may file or
be forced into bankruptcy by its creditors."

     At April 30, 2002, 3dfx had net liabilities in liquidation of $34.7
million. In light of the amount of 3dfx's liabilities, as well as contingencies
relating to unknown or contingent liabilities, the closing the Series B
Financing and Nvidia's delivery of the shares of Nvidia common stock provided
for in the Nvidia asset purchase agreement, there can be no assurance that 3dfx
will have any assets available for distribution to its common shareholders.





                                      -14-
<PAGE>

RISK FACTORS

     This Report contains certain forward-looking statements within the meaning
of the federal securities laws. 3dfx's actual results and the timing of certain
events could differ greatly from those anticipated in these forward-looking
statements as a result of known and unknown factors, including the risks faced
by 3dfx described below. The risks and uncertainties described below are not the
only ones facing 3dfx. Additional risks and uncertainties not presently known by
3dfx or that 3dfx does not currently believe are important may also harm 3dfx's
business operations. If any of the following risks actually occur, 3dfx's
business, financial conditions or results of operations could be seriously
harmed. The following factors and other information in this Report should be
considered carefully in evaluating 3dfx and an investment in 3dfx's common
stock.

3DFX CANNOT DETERMINE AT THIS TIME THE AMOUNT OF DISTRIBUTIONS TO ITS COMMON
SHAREHOLDERS, OR WHETHER ANY DISTRIBUTIONS WILL BE MADE, BECAUSE THERE ARE A
VARIETY OF FACTORS, SOME OF WHICH ARE OUTSIDE OF 3DFX'S CONTROL, THAT COULD
AFFECT THE ABILITY OF 3DFX TO MAKE DISTRIBUTIONS TO ITS COMMON SHAREHOLDERS.

     3dfx cannot determine at this time the amount of or whether there will be
any distributions to its common shareholders because that determination depends
on a variety of factors, including, but not limited to, whether and when the
Series B Financing will close, whether and when Nvidia will deliver the shares
of Nvidia common stock provided for under the Nvidia asset purchase agreement,
whether the value of 3dfx's remaining assets, the amount of 3dfx's and its
subsidiaries' known and unknown debts and liabilities (including those relating
to leases) to be paid in the future, the resolution of pending litigation and
other contingent liabilities, general business and economic conditions and other
matters. Examples of uncertainties that could reduce the value or eliminate
distributions to 3dfx common shareholders include the following:

          o    Whether and when the Series B Financing will close, which is
               subject to a number of conditions, including (i) the period of
               time required to calculate the amount of 3dfx's fixed and
               determinable liabilities and the maximum amount of any
               undetermined 3dfx liabilities, (ii) the satisfaction of certain
               conditions necessary for SF Capital to fund the escrow
               contemplated by the stock purchase agreement, and (iii) the
               satisfaction of any further conditions that 3dfx and SF Capital
               may specify in the related escrow agreement.

          o    Whether and when 3dfx will satisfy the conditions to the delivery
               of shares of Nvidia common stock set forth in the Nvidia asset
               purchase agreement, which shares are only deliverable to 3dfx
               upon the completion of the winding up of the business of 3dfx
               pursuant to 3dfx's plan of dissolution, and 3dfx's certification
               that (i) all liabilities of 3dfx and its subsidiaries have been
               paid in full or otherwise provided for and (ii) 3dfx has or will
               be validly dissolved.

          o    The procedures and uncertainties relating to the contemplated
               judicially administered winding up proceedings for 3dfx.

          o    The volatility in the market price of Nvidia stock.

          o    Delays in completing the dissolution of 3dfx could result in
               additional expenses and result in no distributions to 3dfx common
               shareholders.

          o    The amount of 3dfx's and its subsidiaries' debts and liabilities
               and the estimate of the costs and expenses of 3dfx's dissolution,
               including any tax liabilities. If actual debts, liabilities,
               costs and expenses exceed 3dfx's expectations, actual net
               proceeds will be reduced and may result in no distribution to
               common shareholders at all.

          o    If liabilities of 3dfx or its subsidiaries that are unknown or
               contingent later arise or become fixed in amounts that are
               greater than anticipated.




                                      -15-
<PAGE>

          o    If the resolution of pending or future litigation results in
               greater than anticipated liabilities or expenses.

          o    A decline in the value of Nvidia's common stock.

For the foregoing reasons, there can be no assurance that there will be any
distribution to common shareholders, even if the asset sale is completed.

3DFX MAY NOT BE ABLE TO SATISFY ITS DEBT OBLIGATIONS AND MAY FILE OR BE FORCED
INTO BANKRUPTCY BY ITS CREDITORS.

     3dfx may not be able to successfully close the Series B Financing, in which
event it would not have funds adequate to satisfy all of its known and unknown
debts and liabilities. For example, the stock purchase agreement related to the
Series B Financing is terminable by either party if, among other things, the
Nvidia closing price is equal to or less than $26. Nvidia's current stock price
is less than $26, and there can be no assurance that the stock price will exceed
$26 at the time of closing. If Nvidia's stock price does not increase above $26
at the time of closing, SF Capital may terminate the Series B Financing and 3dfx
will not have the funds needed to satisfy its known and unknown debts and
liabilities. In the event 3dfx is unable to pay its outstanding debts and
liabilities in the near future, 3dfx's creditors may be able to attach 3dfx
assets and may force 3dfx into involuntary bankruptcy. Further, in the event
that 3dfx is unable to pay or otherwise provide for its debts and obligations,
there will be no assets available for distribution to 3dfx's common
shareholders.

THE TIMING OF THE DISSOLUTION OF 3DFX IS NOT KNOWN AND THEREFORE 3DFX CANNOT
DETERMINE THE TIMING OF ANY DISTRIBUTIONS TO ITS COMMON SHAREHOLDERS.

     Several factors affect the timing of 3dfx's ability to dissolve, including
3dfx's ability to determine the amount of its and its subsidiaries' known and
unknown debts and liabilities and 3dfx's ability to resolve litigation and other
contingent liabilities, 3dfx's ability to close the Series B Financing and
3dfx's ability to satisfy the conditions to Nvidia's delivery of the shares of
Nvidia common stock provided for under the Nvidia asset purchase agreement. In
addition, 3dfx believes that it will shortly be in a position to voluntarily
petition a court to take jurisdiction over the final steps of its winding up.
There are a number of procedures and uncertainties relating to judicially
administered winding up proceedings that could have the effect of lengthening
the time before which 3dfx is able to dissolve. Any delay in the dissolution of
3dfx will result in a delay in making distributions, if any, to 3dfx common
shareholders.

3DFX IS UNABLE TO SPECIFY THE TYPE OF ASSETS THAT MAY BE DISTRIBUTED TO 3DFX'S
COMMON SHAREHOLDERS, IF ANY DISTRIBUTION IS MADE.

     3dfx may distribute the shares of Nvidia common stock received by it upon
its dissolution directly to its common shareholders, or it may sell these shares
in the open market or contribute the shares to a liquidating trust for the
benefit of 3dfx's common shareholders. Further, 3dfx may elect to directly
distribute shares of Nvidia common stock to some of its common shareholders,
while distributing an equivalent per share value in cash to others who would
otherwise be entitled to receive a fractional amount or small number of shares
of Nvidia common stock. At this time, 3dfx is unable to provide specifics about
the type of assets that 3dfx's common shareholders may receive or what the value
of those assets might be at the time of distribution.

3DFX'S SHAREHOLDERS COULD BE REQUIRED TO RETURN DISTRIBUTIONS IF CONTINGENT
RESERVES ARE INSUFFICIENT TO SATISFY 3DFX'S LIABILITIES.

     If 3dfx (or a liquidating trust to which 3dfx's assets are transferred)
makes a distribution to its shareholders but maintains inadequate reserves for
the payment of its and its subsidiaries debts and liabilities, each shareholder
could be required to return any additional amounts owed, up to the amount of the
total distribution that the shareholder received. A distribution to 3dfx's
shareholders could be delayed or diminished due to the need to make





                                      -16-
<PAGE>

adequate provisions for 3dfx's and its subsidiaries' debt and liabilities,
including contingent liabilities associated with lawsuits and threatened claims
against 3dfx and its subsidiaries.

     The determination of whether a distribution is made and the amount of the
distribution depends on 3dfx's ability to pay, or provide for the payment of,
its and its subsidiaries' debts and liabilities, including contingent
liabilities related to lawsuits and threatened claims. If these contingent
liabilities later arise or become fixed in amount, 3dfx will be required to pay,
or provide for the payment of, such liabilities from any remaining assets. This
could result in the delay of distributions to 3dfx shareholders and the
substantial reduction or elimination of any distributions.

     If 3dfx's or its subsidiaries' creditors believe that 3dfx has not
adequately reserved assets for the payment of its or its subsidiaries' debts and
liabilities, these creditors may be able to obtain from a court and injunction
that prohibits 3dfx from making distributions to its shareholders. This action
could delay or substantially diminish the distributions to be made to 3dfx's
shareholders or holders of beneficial interests of the liquidating trust, as the
case may be.

3DFX MAY NOT BE ABLE TO DISPOSE OF ITS REMAINING ASSETS FOR VALUES EQUALING OR
EXCEEDING THOSE CURRENTLY DESIRED BY 3DFX.

     Many factors affect the prices that 3dfx may receive for 3dfx's remaining
assets, including availability of buyers for these assets and perceived quality
of these assets. Many of these factors are beyond 3dfx's control. As a result of
the foregoing, 3dfx may not be able to sell or otherwise dispose of its assets
for prices equaling or exceeding those desired by 3dfx or currently offered in
the asset sale.

3DFX'S BOARD OF DIRECTORS MAY AMEND THE PLAN OF DISSOLUTION.

     3dfx's board of directors and shareholders have adopted a plan of
dissolution for the liquidation, winding up and dissolution of 3dfx. 3dfx's
board of directors has reserved the right, in its sole discretion, to amend the
plan of dissolution unless it determines that the amendment would materially and
adversely affect 3dfx's shareholders' interests.

3DFX'S COMMON STOCK WAS DELISTED FROM THE NASDAQ NATIONAL MARKET EFFECTIVE MAY
16, 2001.

     As a result of the decline in the trading price of 3dfx's common stock,
3dfx's common was delisted from the Nasdaq National Market effective as of the
opening of business on May 16, 2001. 3dfx's common stock is currently traded in
over-the-counter bulletin board ("OTCBB") of the National Association of
Securities Dealers, Inc. The delisting of 3dfx's common stock means that, among
other things, fewer investors have access to trade 3dfx's common stock, which
may have resulted in reduced demand for the stock. In addition, 3dfx's common
stock is currently subject to penny stock regulations. The penny stock
regulations require that broker-dealers who recommend penny stocks to persons
other than institutional accredited investors must make a special suitability
determination for the purchaser, receive the purchaser's written agreement to
the transaction prior to the sale and provide the purchaser with risk disclosure
documents which identify risks associated with investing in penny stocks.
Furthermore, the broker-dealer must obtain a signed and dated acknowledgement
from the purchaser demonstrating that the purchaser has actually received the
required risk disclosure document before effecting a transaction in penny stock.
These requirements have historically resulted in reducing the level of trading
activity in securities that become subject to the penny stock rules. Holders of
3dfx's common stock may find it difficult to sell their shares of common stock,
which can adversely affect the market price of 3dfx's common stock.





                                      -17-
<PAGE>

IF 3DFX IS UNABLE TO FILE ITS SEC REPORTS IN A TIMELY MANNER, ITS COMMON STOCK
WILL BE REMOVED FROM THE OTCBB.

     While 3dfx will continue to endeavor to make all required filings with the
Securities and Exchange Commission in a timely manner in accordance with OTCBB
rules, 3dfx may not be able to do so. If that occurs, 3dfx's common stock will
be removed from the OTCBB and quoted on the National Quotation Bureau's pink
sheets. This would be likely to further reduce demand for 3dfx's common stock,
which could result in inadequate trading volumes to provide liquidity and could
cause 3dfx's stock price to further decrease.

ONCE 3DFX IS DISSOLVED OR ALL OF ITS ASSETS ARE TRANSFERRED TO A LIQUIDATING
TRUST, IT WILL CLOSE ITS STOCK TRANSFER BOOKS AND NO TRANSFER OF 3DFX'S COMMON
STOCK WILL BE RECORDED.

     Once 3dfx is dissolved or all of its assets are transferred to a
liquidating trust, it will close its stock transfer books and no transfer of
3dfx's common stock will be recorded. Thereafter, certificates representing 3dfx
common stock will not be assignable or transferable on 3dfx's books except by
will, intestate succession or operation of law. The equity interests of all of
3dfx's shareholders will be fixed on the basis of their respective stock
holdings at the close of business on the final record date for the distribution
of all remaining assets of 3dfx, and after the final record date, any
distributions made by 3dfx will be made solely to the common shareholders of
record on such date, except as may be necessary to reflect subsequent transfers
recorded on 3dfx's books as may be necessary to reflect subsequent transfers of
3dfx's common stock as a result of any assignments by will, intestate succession
or operation of law. For any other trades after the final record date, the
seller and purchaser of 3dfx's stock will need to negotiate and rely on
contractual obligations between themselves with respect to the right to a
liquidating distribution arising from ownership of 3dfx's common stock.

3DFX IS AT RISK OF SECURITIES CLASS ACTION LITIGATION DUE TO ITS STOCK PRICE
VOLATILITY.

     Historically, securities class action litigation has often been brought
against a company following periods of volatility in the market price of its
securities. 3dfx may be the target of litigation like this. Securities
litigation would result in substantial costs and divert management's attention
and resources, which would seriously harm 3dfx's ability to complete its
dissolution and may reduce or eliminate the assets available for distribution to
3dfx common shareholders.

3DFX MAY BE SUBJECT TO CLAIMS OF FRAUDULENT CONVEYANCE BY 3DFX'S CREDITORS.

     3dfx has incurred substantial indebtedness. Under federal and state
fraudulent conveyance statutes in a bankruptcy, reorganization or rehabilitation
case or similar proceeding or a lawsuit by unpaid creditors of 3dfx, under
certain circumstances, such a court could void the asset sale to Nvidia Sub or
the sale of its remaining assets and/or take other action detrimental to 3dfx
and its shareholders. These circumstances include the findings that, at the time
3dfx consummated the asset sale, (i) the assets were sold to hinder, delay or
defraud current or future creditors or (ii) (A) 3dfx received less than
reasonably equivalent value or fair consideration for its assets and (B) 3dfx,
(1) was insolvent or was rendered insolvent by reason of an asset sale, (2) was
engaged, or about to engage, in a business or transaction for which its assets
constituted unreasonably small capital, (3) intended to incur, or believed that
it would incur, debts beyond its ability to pay as such debts matured (as all of
the foregoing terms are defined in or interpreted under such fraudulent
conveyance statutes) or (4) was a defendant in an action for money damages, or
had a judgment for money damages docketed against it (if, in either case, after
final judgment, the judgment is unsatisfied).

     The measure of insolvency for purposes of the foregoing considerations will
vary depending upon the federal or local law that is being applied in any such
proceeding. Generally, however, 3dfx would be considered insolvent if, at the
time it consummated an asset sale, either (i) the fair market value (or fair
saleable value) of its assets is less than the amount required to pay its total
existing debts and liabilities (including the probable liability on contingent
liabilities) as they become absolute and mature or (ii) it is incurring debts
beyond its ability to pay as such debts mature.




                                      -18-
<PAGE>

3DFX MAY BE UNABLE TO NEGOTIATE SETTLEMENTS WITH RESPECT TO ITS REMAINING
LIABILITIES.

     3dfx is currently in the process of negotiating settlements with respect to
its and its subsidiaries' remaining debts and liabilities which include property
and equipment leases, a contractual dispute with Worldcom and certain trade
payables. If 3dfx is unable to successfully negotiate satisfactory resolutions
of these matters, it will have less or no cash proceeds to distribute to its
common shareholders.

3DFX WILL CONTINUE TO INCUR THE EXPENSE OF COMPLYING WITH REPORTING REQUIREMENTS
UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED (THE "EXCHANGE ACT").

     3dfx is obligated to comply with applicable reporting requirements of the
Exchange Act, even though compliance with such reporting requirements is
economically burdensome. The Exchange Act provides for an exemption which allows
an issuer to terminate its reporting obligations under the Exchange Act if it
has less than 300 record holders or less than 500 record holders and its total
assets have not exceeded $10.0 million on the last day of each of the issuer's
most recent three fiscal years. At this time, 3dfx has approximately 500 record
holders and has had in excess of $10.0 million in total assets for each of the
last three fiscal years, except the fiscal year ended January 31, 2002. As such,
3dfx is unable to terminate its reporting obligations at this time. 3dfx cannot
predict if, or when, it will meet the requirements for the exemption. The
expenses for the preparation and filing of periodic reports will reduce the cash
available for distribution to 3dfx common shareholders.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

     Interest rate risk. 3dfx's cash equivalents are exposed to financial market
risk due to fluctuation in interest rates, which may affect interest income. Due
to the short term nature of the investment portfolio, 3dfx would not expect
operating results or cash flows to be affected to any significant degree by the
effect of a sudden change in market interest rates. 3dfx does not use its
investment portfolio for trading or other speculative purposes.

     Foreign currency exchange risk. Substantially all of 3dfx's expenses are
denominated in U.S. dollars, and, as a result, 3dfx has relatively little
exposure to foreign currency exchange risk. 3dfx does not currently enter into
forward exchange contracts to hedge exposures denominated in foreign currencies
or any other derivative financial instruments for trading or speculative
purposes. However, in the event exposure to foreign currency risk increases,
3dfx may choose to hedge those exposures.


                           PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

     3dfx is a party to litigation filed February 23, 2001 by Worldcom, Inc. in
Dallas County on an open account for telephone services. The amount of damages
stated in the petition was $1,389,000 plus interest and attorney's fees. Trial
is set for October 14, 2002. The parties engaged in nonbinding mediation on June
24, 2002, but no resolution was achieved. Initial depositions have been
conducted. 3dfx disputes Worldcom's claims and intends to vigorously defend
itself in this matter.

     3dfx is also involved in litigation filed against it in the 192nd District
Court on February 11, 2002 by Fortran Trust, 3dfx's lessor for its former
headquarters in San Jose, California. The landlord filed for breach of lease in
a tenant in possession action based on 3dfx's failure to pay rental amounts that
are delinquent. 3dfx is seeking to negotiate a settlement of its lease
obligations owed to Fortran Trust. The lessor also filed for and received from
the court a Writ of Attachment on March 8, 2002. The lessor is presently
attempting to schedule a summary judgment hearing. Finally, a default judgment
was entered in favor of CarrAmerica, 3dfx's lessor for its offices in Austin,
Texas, on May 20, 2002 resulting from a lawsuit filed April 18, 2002 in the
261st Judicial District Court of Travis County, Texas. The judgment is now
final. CarrAmerica may take steps to enforce that judgment against 3dfx. 3dfx is
seeking to negotiate a settlement of its lease obligations owed to CarrAmerica.




                                      -19-
<PAGE>

     3dfx is also a party to various legal proceedings involving collection
matters against it, all as more fully described in 3dfx's Annual Report on Form
10-K filed June 14, 2002. 3dfx is currently seeking resolutions that are
mutually acceptable to the parties involved in each of these matters. However,
there is no assurance that resolutions will be achieved.

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

     On June 13, 2002, 3dfx entered into a Series B Preferred Stock Purchase
Agreement with SF Capital Partners Ltd. whereby SF Capital agreed to invest
between $25 and $35 million in 3dfx in exchange for shares of 3dfx's Series B
Preferred Stock. The Series B Financing has not yet been closed and therefore no
shares of Series B Preferred Stock are currently outstanding. Upon issuance, the
Series B Preferred Stock will not be entitled to dividends, subject to
redemption or conversion, and will have no voting rights, but it will have
priority for payment upon the liquidation, winding-up or dissolution of 3dfx. If
3dfx is in the process of liquidating, dissolving or winding up, immediately
upon its receipt of 500,000 or more shares of Nvidia common stock, 3dfx shall
distribute to the holders of the Series B Preferred Stock, at 3dfx's election,
either (i) $90 cash per share of Series B Preferred Stock or (ii) one share of
Nvidia stock per share of Series B Preferred Stock. In the meantime, the prior
written consent of the holders of not less than a majority of the outstanding
shares of Series B Preferred Stock is required for 3dfx to make any dividends,
distributions or redemptions on any other securities, or for 3dfx to issue any
debt or equity securities, or for 3dfx to enter into any merger, sale of shares
of capital stock having voting power with respect to 35% or more of its
outstanding capital stock, or any transaction in which all or substantially all
of the assets of 3dfx are sold.

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

         10.01    Lease Termination and Settlement Agreement dated April 19,
                  2002 by and among Complejo Industrial Fuentes, S.A. de C.V.,
                  STB de Mexico, S.A. de C.V. and STB Systems, Inc.
                  (incorporated by reference to Exhibit 10.37 to 3dfx's Annual
                  Report on Form 10-K filed on June 14, 2002).

     (b) Reports on Form 8-K

         None




                                      -20-
<PAGE>

     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.

Dated:  July 11, 2002

                                           3DFX INTERACTIVE, INC.
                                           (Registrant)


                                           By:  /s/ RICHARD A. HEDDLESON
                                           ------------------------------------
                                           Richard A. Heddleson
                                           Chief Executive Officer and Chief
                                           Financial Officer
                                           (Principal Financial Officer and
                                             Duly Authorized Officer)



                                      -21-



