VIEWCAST COM INC, 10KSB/A, 2000-05-01

VIEWCAST COM INC
10KSB/A, 2000-05-01
RADIO & TV BROADCASTING & COMMUNICATIONS EQUIPMENT

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U.S. SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

Amendment No. 1
to
FORM 10-KSB

[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.

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

For Fiscal Year Ended December 31, 1999
Commission File Number: 0-29020

VIEWCAST.COM, INC.
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(Exact Name of Small Business Issuer as Specified in its Charter)

Delaware 75-2528700
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(State of Incorporation) (I.R.S. Employer Identification No.)

2665 VILLA CREEK DRIVE, SUITE 200 DALLAS, TEXAS 75234 (972) 488-7200

(Address including zip code, area code and telephone number of
Registrant's executive offices.)

Securities registered pursuant to Section 12(b) of the Act: None

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

<TABLE>
<CAPTION>
Title of Each Class Name of Each Exchange on Which Registered
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<S> <C>
Common Stock, $.0001 par value NASDAQ
Redeemable Common Stock Purchase Warrants NASDAQ
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Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act during the past 12 months (or for
such shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days.
Yes [X] No [ ]

Check if disclosure of delinquent filers in response to Item 405 of Regulation
S-B is not contained in this form, and no disclosure will be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. [ ]

Issuer's revenues for its most recent fiscal year: $7,270,080

As of March 20, 2000, 15,260,350 shares of the Registrant's common stock were
outstanding.

State the aggregate market value of the voting stock held by non-affiliates
computed by reference to the price at which the stock was sold, or the average
bid and asked prices of such stock, as of a specified date within the past 60
days: As of March 20, 2000 - $81,353,974. This amount was computed by reference
to the average of the bid and asked prices of registrant's common stock.

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TABLE OF CONTENTS

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ITEM NO. PAGE
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PART I

1. Description of Business........................................................................3

2. Description of Property.......................................................................13

3. Legal Proceedings.............................................................................13

4. Submission of Matters to a Vote of Security Holders...........................................13

PART II

5. Market for Registrant's Common Equity and Related Stockholder Matters.........................14

6. Management's Discussion and Analysis of Financial Condition and Results of Operations.........14

7. Consolidated Financial Statements.............................................................18

8. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure..........38

PART III

9. Directors, Executive Officers, Promoters and Control Persons; Compliance with Section 16(a)
of the Exchange Act...........................................................................39

10. Executive Compensation........................................................................41

11. Security Ownership of Certain Beneficial Owners and Management................................46

12. Certain Relationships and Related Transactions................................................48

13. Exhibits and Reports on Form 8-K..............................................................48
</TABLE>

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PART I
ITEM 1. DESCRIPTION OF BUSINESS

OVERVIEW

ViewCast.com, Inc. ("ViewCast") enables video communication over the
Internet and other networks through vertically-integrated components, systems,
and turnkey solution products and services. We are a leading global provider of
enterprise-wide, digital video communication solutions for both real-time and
on-demand applications. We deliver innovative networked video solutions, as well
as systems that can work with legacy video communication equipment. Our
Osprey(R) video capture cards and codecs, ViewCast(R) Encoding and Streaming
Video System and Viewpoint VBX(TM) System products deliver a wide array of video
solutions for both digital and analog video communication systems.

As a new initiative in the year 2000, we have added video content hosting
services and will be providing professional services to meet the growing demand
from public and private sector enterprises to add or extend video communications
internally and externally. One of our hosting services, "YourVideoOnTheWeb(TM)",
is a consumer product designed to bring streaming media capabilities to home
users and small businesses enabling them to add video content to their web
sites.

Our customers acquire our solutions and products to enhance communication
and productivity, reduce costs and increase customer service within
corporations, educational networks, healthcare facilities, financial
institutions and government agencies, as well as between those entities, their
customers, vendors and others with whom they may communicate. Our customers use
our products to enable them to broadcast video over computer networks (streaming
video), deliver video from web sites (on-demand streaming video), provide
interactive video communication (video conferencing), and distribute video
within a network. We market, install and support our products either directly or
through arrangements with leading OEMs, system integrators, leading resellers
and application developers worldwide.

To reflect the growing importance of the Internet as a means of transmitting
video, on April 8, 1999, we changed our name to ViewCast.com, Inc. from
MultiMedia Access Corporation. As part of a strategic emphasis on sales,
marketing and strategic planning, we added three senior executives within the
last five months: President and Chief Executive Officer George C. Platt, Senior
Vice President of Sales and Marketing Harry E. Bruner, and Chief Financial
Officer Laurie L. Latham. These executives are now leading the organization
along with certain of our continuing executives, including Neal Page, Vice
President/General Manager of Osprey(R) Technologies Division and David T.
Stoner, Vice President of Operations. These management changes reflect our
commitment to the new strategies formulated for our existing and new markets.

INDUSTRY BACKGROUND

Technology has merged with current business dynamics causing unprecedented
potential for growth and revenue, an increased likelihood for confusion, and new
challenges to compete and sustain position. As reported by the 1999 Information
Week Magazine Annual IT Survey, "Companies are more aggressive than ever about
adopting and deploying leading edge technologies -- based solely on the fear of
being left behind."

Within this environment, we believe businesses will increasingly seek expert
support to reduce confusion and to present solutions to their business
challenges. We believe that to meet these business challenges, there will be
increased usage of video communication products and services.

Video Communications

Video "personalizes" communications over networks, whether it is streaming
video or video conferencing. To transmit live video images (which may contain
over 90 million bits per second of data) over communications networks, video
data must be digitized and significantly compressed to fit the capacity of these
networks (as low as 28,800 bits per second). As video is compressed, redundant
data is eliminated and other data is "blended" with similar data to preserve the
essence of the original image depending on the amount of compression required.
More compression is required as the network capacity

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decreases. After transmission, the video image is reconstructed for display at
the receiving end by the viewer. The quality of the reconstructed video image is
a function of the following:

o the sophistication of the video and audio compression algorithms;

o the capacity a network has to transmit real-time data (bandwidth);

o the power of the video and audio encoding and decoding hardware
(codecs); and

o the speed and power of PCs and workstations.

We believe cost-effective video communication applications and services are
now attainable because the performance, capabilities and cost of these four key
elements have improved significantly.

Video no longer requires special equipment and networks, and can utilize
existing network capabilities and equipment. Networks have been advanced through
the deployment of additional bandwidth by carriers and Internal Service
Providers (ISPs), new network technologies (such as multicast), faster
capabilities to connect to networks (xDSL and cable modem) and lower bandwidth
costs. We believe the unparalleled reach of the video-capable audience has
created increased demand, currently estimated at over 150,000,000 seats of users
capable of receiving video at their computer.

Streaming Video

The explosive growth of the Internet has resulted in the growing popularity
of networked streaming media. Streaming video allows both audio and video
content to begin playing at the viewer's computer even before the content has
been fully received, since a viewer does not have to wait for the full data
content file to be downloaded before hearing and viewing the file.

Network streaming video makes it possible to put the power and impact of
video communications on most computers. Corporations, schools, government
agencies and healthcare entities are already using streaming video for all kinds
of communications, including training, e-commerce, customer service, marketing,
entertainment and security. Revenues related to the streaming video industry
have been estimated at $277 million in 1998 and $540 million in 1999. According
to Paul Kagan's forecast for the streaming video market, revenues should reach
$900 million in 2000 with growth more than doubling in each of the next two
years to reach $4.7 billion by 2002 and reaching $9 billion by 2004.

E-commerce growth has created greater demand for video to allow customers to
"see" a product before purchasing and to enhance online advertisements. In
addition, businesses are using video to deliver a variety of high quality radio
and TV content, support product sales and improve customer relations with
"video" contact centers, allow investors to view annual and quarterly meetings,
and support an endless variety of other services and businesses.

Content Hosting and Distribution

The advent of the commercial streaming video market has resulted in
specialized businesses that offer substantially improved capabilities to
produce, host, aggregate, and deliver media over the Internet. These businesses
offer services similar to traditional ISPs, but they optimize their network and
services to effectively deliver streaming media data to clients. These providers
have created an increased demand for video communication products.

High traffic media hosting and distribution services are expensive and out
of reach for most individuals and small to medium sized businesses. Network and
hosting needs for this set of customers differ from that required by large scale
businesses. We believe this market represents a new potential for growth in the
streaming video marketplace.

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Videoconferencing and Video Distribution

Over the past decade, videoconferencing has evolved from high-cost,
stand-alone boardroom systems to standards-based desktop systems and set-top
appliances. Customers are seeking solutions and products that are complementary
to their existing systems, interface with a variety of networks and protocols,
provide a method for system management, reduce the effective cost of ownership,
and are upgradeable. We believe the expansion in streaming video has caused a
resurgence of interest in enterprise video distribution and conferencing.

OUR SOLUTION

As a vertically integrated provider, ViewCast provides video and media
solutions to our customers. We provide:

o TECHNOLOGY -- Our technology provides a competitive edge allowing us to
differentiate our products from those of our competitors and increasing
our ability to develop customer driven applications.

o PRODUCTS AND APPLICATIONS -- Our products consist of Video Subsystems,
such as capture cards and codecs for encoding, decoding and streaming,
and Video Systems solutions for digital and analog video applications.
We manufacture and distribute worldwide our Osprey(R) video capture
cards and codecs, ViewCast(R) Streaming Video solutions and Viewpoint
VBX(TM) Systems. YourVideoOnTheWeb(TM) is a consumer product used to
encode video from a camcorder or VCR.

o EXPERTISE AND SERVICES -- Our comprehensive video expertise enables us
to assist customers in identifying their communication needs and
determine appropriate media mechanisms for their business requirements.
Once established, our professional service organization will complement
our sales engineering and training organization by offering broader
customer solutions and support services. A significant addition will be
our content hosting service (ViewCast Online(TM)).

To successfully implement our solution, we provide installation, training,
customer service, integration, customization, and contract development. Our
software and firmware integration modules and drivers allow us to integrate our
products and systems into a variety of video communication standards and
software applications. Our products function on several network standards (some
concurrently) and interface with a variety of equipment and PC systems.

BUSINESS STRATEGY

Our objective is to be the world's premier supplier of products, services
and solutions for networked video applications. Key elements of our strategy
include:

o EXTEND PRODUCT OFFERINGS BUILDING ON OUR LEADERSHIP IN THE STREAMING
VIDEO MARKET -- We intend to expand product offerings and add
significant value to the leading networked video applications by
developing competitive hardware products and providing world-class
software. We believe our recognized technological expertise will allow
us to lead the industry and capture market share.

o PROVIDE VIDEO COMMUNICATION SYSTEM AND APPLICATION SOLUTIONS -- We
deliver video communication solutions, including individual video
subsystems and turnkey systems and applications, that appeal to
customers who are looking for a complete solution to their video
communication needs. Our systems are designed to be easy to install,
cost-effective and user-friendly. We believe our system and application
solutions approach provides a significant competitive advantage.

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o ESTABLISH CONTENT HOSTING SERVICES -- As part of our vertically
integrated solution, we intend to use our expertise, hardware solutions
and technology to establish the ViewCast Online(TM) Content Hosting
Service to offer solutions to web content channels for hosting video.
YourVideoOnTheWeb(TM) is our first phase of this service for individuals
and small businesses.

o PROVIDE PROFESSIONAL SERVICES -- We are establishing a professional
services organization to assist customers who want to add video to their
networks. We believe we can shorten the video learning curve by offering
consultation to end users, general consultants and specific e-commerce
web consultants and providing innovative video capabilities to give
their business a competitive advantage.

o EXPAND AND LEVERAGE OUR STRATEGIC PARTNERSHIPS -- We have established
significant industry partnerships with leaders in the networked video
industry. We intend to strengthen these partnerships and establish new
partnerships to enhance endorsements, referrals, technology, product
development, channel distribution, and sales.

o EXPAND SALES, MARKETING, AND CHANNEL DEVELOPMENT EFFORTS -- Critical to
our success is an effective worldwide sales, marketing, and channel
partner program. We are expanding our sales efforts, both domestically
and internationally, through additional sales representatives, sales
engineers and channel partners. Our strategy is to utilize a combination
of our direct sales force, resellers, system integrators, OEMs and
custom application developers to distribute our product solutions.

o DEVELOP WORLDWIDE BRAND RECOGNITION -- We are developing a strong brand
identity in the video communication marketplace that will result in a
significant competitive advantage and permit us to more easily introduce
new products, applications, and services.

OUR PRODUCTS AND SERVICES

We currently provide and intend to expand the following product families:

VIDEO SUBSYSTEMS VIDEO SYSTEM SOLUTIONS

Osprey(R) video capture cards and codecs ViewCast(R) Streaming Video
Viewpoint VBX(TM)

We are in the process of establishing the following new services:

PROFESSIONAL SERVICES CONTENT HOSTING SERVICES

YourVideoOnTheWeb(TM)
ViewCastOnline(TM)

OUR PRODUCTS

We currently offer a broad array of products that when used together provide
an enterprise-wide solution for multiple video communication applications for
private and public sector customers. Our standards-based and multi-standards
based products complement each other and can be used in a variety of ways to
best serve our customers' needs. Our solutions can work within the framework of
legacy systems, and are flexible enough to meet present and future needs. The
ViewCast product family includes the Osprey(R) line of video capture cards and
codec cards, the ViewCast(R) Streaming Video Systems, and the Viewpoint VBX(TM)
video distribution and switching system.

VIDEO SUBSYSTEMS

CAPTURE CARDS, CODECS AND VIDEO PERIPHERAL PRODUCTS. Under the Osprey(R)
brand, we design, develop, manufacture and market standards-based video and
audio capture cards, codecs, and peripheral products for multimedia
applications.

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We believe our Osprey(R) capture cards offer unique advantages to
application developers, integrators and OEMs including a cross-platform API
(application programming interface) available on both Windows and UNIX systems.
These cards are in compliance with most popular industry video standards, and we
provide an expert support and development staff to enable custom development of
required applications.

Our Osprey(R) codecs provide the necessary capability at the web site server
to allow the one-way transmission of live broadcasts over the Internet and
intranets. The codecs capture, digitize, compress, transmit, receive, decompress
and display full-motion video. The codecs are compatible with multiple video and
audio compression standards and can be used for PCs and workstations that are
standard PCI-bus or Sun's S-bus. Our codecs also support Microsoft's WindowsNT
and Windows95, and Sun's Solaris and UNIX operating systems.

Osprey(R) cards and codecs are sold world wide through OEMs, integrators,
and a worldwide network of VARs and distributors. This product line includes:

o Osprey(R)100, video capture for Windows and Linux platforms;

o Osprey(R)150, video capture for Sun (Solaris UNIX) workstations;

o Osprey(R)200, video and audio capture for Windows and Linux platforms;

o Osprey(R)1000, video codec for Windows platforms; and

o Osprey(R) 1500, video codec for Sun workstations (re-labeled as the
SunVideo Plus card by Sun Microsystems).

VIDEO SYSTEM SOLUTIONS

VIEWCAST(R) STREAMING VIDEO SYSTEMS. Our ViewCast(R) Streaming Video System
product line is designed to capitalize on the rapid growth of the Internet and
intranets to deliver streaming media. Our ViewCast(R) Streaming Video Systems
are designed to simplify the streaming of video onto networks and from web
sites. This product family offers a turnkey solution combined with capabilities
that remove deployment barriers.

The ViewCast(R) Streaming Video servers combine our Osprey(R) codecs with
popular video-streaming software to provide a complete hardware and software
system for encoding and streaming Internet video broadcasts. Two advantages of
our system are:

o Capacity -- Our Osprey(R) codecs provide the capability necessary to
allow multiple streams from the web site server.

o Added Value Bundling -- Value add packages of additional software and
applications deliver increased versatility and value to the marketplace.

Our ViewCast(R) Encoding Station is a Windows NT-based system that handles
up to six video feeds from cameras, tape or other A/V devices and provides
broadcast streams at multiple bandwidths simultaneously. ViewCast(R) Encoding
stations are fully integrated and optimized for media systems with
pre-configured Osprey(R) video devices, media capture software, and streaming
video encoding software. Our encoding control software simplifies the user
interface and dramatically reduces CPU memory requirements, thereby increasing
overall system performance. Configurations are also available in versions for
professional broadcasters who require redundant power supplies and disk storage.

The ViewCast(R) Streaming Server, which is bundled with either RealServer or
Windows Media Server, can broadcast encoded streaming content to more than 1,000
simultaneous endpoints. Our ViewCast(R) Streaming Server delivers a turnkey
system pre-loaded with streaming server software, ready for addition to a
corporate, workgroup, or business network.

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With software from Virage, the ViewCast(R) "Encoding/Logging Station" is a
single system that creates a fully searchable index of video content. This
capability is made possible by the use of our advanced Osprey-1000/G2 codec,
making a one system solution. The ViewCast(R) Logging Station won Best of Show
at Internet World in Chicago, July 1999.

VIEWPOINT VBX(TM) SYSTEMS. Our Viewpoint VBX(TM) enterprise-wide video
communication system enables desktops and conference rooms to access a choice of
video communication resources. The server and codec array support a suite of
video communication standards, including H.323 (video over TCP/IP networks),
MPEG-2, H.320 (video over ISDN), and H.324 (video over standard telephone
lines), in addition to NTSC and PAL interfaces for connection of commercial and
consumer A/V devices. The Viewpoint VBX(TM)'s premise distribution of
uncompressed, TV-quality video over standard unshielded twisted pair (UTP)
cabling at distances up to 3,500 feet provides relief to the LAN, using the LAN
only for client-server control. The Viewpoint VBX(TM) can be integrated with our
ViewCast(R) Streaming Video encoders to enable a supported standards-based video
communication system to originate a streaming video broadcast.

Viewpoint VBX(TM) simplifies video communication by integrating support for
multiple applications and multiple standards into a single platform with a
single user interface. The Viewpoint VBX(TM) system can be used for broadcast
and closed circuit television distribution, security, training, and video
conferencing. Regardless of the application, the highest possible video quality
is maintained. The addition of MPEG-2 codecs to the Viewpoint VBX(TM) extends
the TV quality of local VBX communication to multiple sites. Users can choose a
video quality level based on the content and purpose of each call.

Viewpoint VBX(TM) systems are suited for the implementation of video enabled
customer service systems, especially for Internet e-commerce applications. SNMP
support is available for all supported codecs, enabling network managers to
monitor and manage the status of VBX communication resources using standard
network management tools.

Viewpoint VBX(TM) systems are compatible with a wide variety of
standards-based video communication products from third party vendors, while
offering a growth path to new technology. Local VBX clients do not require high
bandwidth networks to extend television quality video to the desktop. The H.323
and MPEG-2 codecs take advantage of the investment in backbone LAN and WAN
networks and the Internet to transport video without incurring per-minute
charges for circuit-switched networks such as ISDN.

Software development kits (SDKs) are available for the Viewpoint VBX(TM),
allowing integrators to customize applications to take advantage of the
Viewpoint VBX(TM) capabilities. Our professional service organization will use
these capabilities to create new point products in response to customer needs.

OUR CONTENT HOSTING SERVICES

We have recently introduced simple, comprehensive hosting services for
streaming media. Initially targeted at the individual and small business market,
we have developed a scalable infrastructure for providing outsourced services
that complements our products. In this manner, we can serve millions of
individual consumer's needs and utilize the same infrastructure to provide
outsourced streaming hosting and delivery for our business customers. We believe
these services round out our full spectrum of solutions, leveraging our
expertise, products, and distribution channels for our customers.

YOURVIDEOONTHEWEB(TM)--YourVideoOnTheWeb(TM) allows individuals and small
businesses to use camcorders to share video with friends, family and customers
over the Internet. We believe YourVideoOnTheWeb(TM) removes existing barriers
(i.e., price and complexity) to consumer video communication.

Our concept consists of three elements:

o YourVideoOnTheWeb(TM)Retail Package and Distribution.

o www.YourVideoOnTheWeb.com Internet Site.

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o YourVideoOnTheWeb(TM)Hosting Service.

The retail package of YourVideoOnTheWeb(TM), includes an Osprey(R) video
capture device (PCI or external USB) and software to permit customers to use
their PC and VCR or camcorder for:

o Preparing video for the Internet.

o Saving video to the hosting site.

o Viewing video on the recipient's PC.

We sell this product in the U.S. from our Internet site, in retail stores
and through catalogues. Hauppauge Digital, Inc., a distributor of consumer video
products, distributes YourVideoOnTheWeb(TM)to retail stores.

VIEWCAST ONLINE(TM) HOSTING SERVICES -- Embedded on the
YourVideoOnTheWeb(TM) site is a hosting service for online storage and delivery
of streaming media. We have developed extensive account management, measurement,
and upload capabilities with a secure database that is optimized for media
hosting and delivery. This scalable infrastructure provides the foundation for
our consumer, small business and professional hosting services. Internet content
channels can use our hosting services to provide extended products and services
to Internet communities.

OUR PROFESSIONAL SERVICES

We are establishing a professional services organization to provide our
customers with the expertise necessary to access their video communication needs
and successfully deploy the infrastructure and systems capable of meeting their
requirements.

In addition to providing technical expertise, our expert consultants will
advise businesses on how to get the most value from their video communications,
whether by adding streaming training video to desktops, adding face-to-face
real-time customer service to e-commerce Internet sites, or other innovative
uses of video. We can work with internal and external resources to provide
custom development of applications, software, hardware and installation to meet
the needs of our customers.

APPLICATIONS

Our product family is designed to meet the three fundamentals of video-based
applications:

o LIVE VIDEO BROADCAST-- One-way, one-to-many broadcast of video, audio
and other data as content is produced;

o STORED VIDEO BROADCAST -- One-way, one-to-many broadcast of video, audio
and other data after content is produced; and

o LIVE INTERACTIVE -- Interactive video/audio communication, with
bi-directional real-time channels (sometimes combined with other data).

A number of these fundamentals are combined utilizing our products to meet
the needs of various communication system requirements.

o INTERNET VIDEO PUBLISHING -- We offer applications that allow
stored-video content to be played back to a user's system in real-time.
This entails compressing a video "clip" and storing it on a server that
is available to the user through the relevant web page.

o INTERNET VIDEO BROADCASTING -- We offer systems that provide one-way
live audio and motion-video. Our products work in conjunction with web
servers and browser software to establish connections between multiple
users and a broadcast source, allowing businesses to deliver live
programs, commercials and other information over the Internet.

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o INTERNET VIDEO CONTACT CENTER -- We offer systems that provide one-way
live video and two-way audio across the Internet. The use of H.323
(video conferencing over TCP/IP networks) as a Viewpoint VBX(TM)
supported video communication standard provides new solutions to
e-commerce by adding the opportunity for customers to access a contact
center through video over the Internet. The Viewpoint VBX(TM)
architecture, in concert with new web-centric software development,
manages Internet video calls in a contact center environment. Viewpoint
VBX(TM) systems support call queuing, transfer, and ad hoc conferencing
necessary for contact center call management. Extensions to our software
development kits include Active Server Page (ASP) technology for
webserver integration and call management extensions enabling
integration of Viewpoint VBX(TM) systems within existing contact center
call management software.

o STREAMING VIDEO GATEWAY -- Our Viewpoint VBX(TM) and ViewCast(R) encoder
systems can be combined to deliver solutions for origination of
streaming video broadcasts. For example, an H.320 codec combined with a
ViewCast(R) Streaming Video encoder can be configured as a gateway
device, turning any H.320 conferencing system into a web video broadcast
site. Viewpoint VBX(TM) systems can also be used as camera
concentrators, allowing the selection of any connected camera as the
source of a web video broadcast.

o VIDEO PRESENTATIONS OR LIVE VIDEO -- Our products offer businesses or
organizations the opportunity to broadcast live events over enterprise
networks, intranets and the Internet. These events could include
educational seminars, management briefings, human resources orientations
or breaking news being created and transmitted by the organization
itself or by outside sources.

o VIDEOCONFERENCING -- Our products offer the business and institutional
customer a cost-effective and efficient means of establishing an
enterprise-wide videoconferencing system. Our Viewpoint VBX(TM) and
Osprey(R) codecs permit employees, students or other members of an
organization in different offices or geographic locations to communicate
with each other through live video.

o SPECIFIC APPLICATIONS -- Our products offer a broad array of
applications within specific industries. For instance, in the health and
medical industry, our products allow doctors to collaborate via
videoconferencing, to receive computed tomography (CT) scans,
ultrasounds and other diagnostic tests at locations remote from the
hospital or patient and to take part in educational and training
broadcasts.

o REMOTE TECHNICAL SUPPORT -- Video can add value when attempting to
remotely troubleshoot a field problem. Frequently, difficult problems
require an expert to travel to a problem site to resolve a relatively
simple problem, resulting in an unnecessary waste of time and money.

MARKETING AND SALES

We market our products primarily via third-party distribution channels
including, but not limited to, OEMs, resellers and system integrators. These
relationships are non-exclusive and typically require that these resellers
participate in the marketing, installation and technical support of our
products. In addition, we plan to continue to expand our distribution channels
both domestically and internationally. We have added a small direct sales
component to address defined vertical markets and early video adopters.

Our Internet-related products are marketed primarily to entities that
develop web sites. We bundle our products with other popular web-video products
and sell or license our subsystems to resellers to integrate with their web
development products.

For consumer products, we depend on major OEM customers, such as Hauppauge
Digital, Inc. that provide access to consumer marketing channels. These OEMs
have established relationships with manufacturers and resellers and typically
pay licensing fees and royalties to bring new leading-edge products to market.
Hauppauge Digital, Inc. is our retail distribution partner for
YourVideoOnTheWeb(TM).

We have recently increased our advertising efforts. We intend to
aggressively publicize our many products and services.

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PRODUCTION AND SUPPLY

We build our current products using contract manufacturers in the U.S. Our
operations personnel in Dallas, Texas are responsible for parts planning,
procurement and final testing and inspection to quality standards. We plan for
most high-volume production to be handled through large OEMs or contract
manufacturers.

We have been and will continue to be dependent on third parties for the
supply and manufacture of our components and electronic parts, including
standard and custom-designed components. We generally do not maintain supply
agreements with such third parties but instead purchase components and
electronic parts pursuant to purchase orders in the ordinary course of business.
We are substantially dependent on the ability of our third-party manufacturers
and suppliers to meet our design, performance and quality specifications.

INSTALLATION, SERVICE AND MAINTENANCE

Many of our products are customer installable. We provide third-party field
installation and support. We maintain a small in-house technical support group
and also depend on our resellers to install and service our products.

We offer limited warranties covering workmanship and materials, during which
period our resellers or we will replace parts or make repairs. We maintain an
in-house staff of engineering personnel and offer telephone support to assist
resellers and end-users during normal business hours.

In addition, we enter into annual contracts with end-users to provide
software and hardware maintenance on our products.

RESEARCH AND DEVELOPMENT

We continue to focus on research and development activities related to video
communications applications. Our recent development efforts have been devoted to
the design and development of our products and software applications, primarily
in the streaming sector (ViewCast(R) encoding and streaming services, and our
Osprey(R) line of capture cards and codecs). These include media processing
devices (CPUs, DSPs), operating system software, standard computer I/O
interfaces, media devices, media API software, and application software. We will
continue to make investments in core video technology and processing techniques,
focusing on how to best apply the latest advancements in the industry into
commercially viable products. In some cases, strategic partnerships will be
utilized to offset some research and development costs.

Several new products are scheduled for launch in 2000 in the Osprey(R)
product family that will provide new I/O capabilities for streaming video
applications, as well as products utilizing new video compression formats
delivering higher quality video over digital networks. We believe these products
will be competitive and feature unique capabilities that will enhance leading
video applications. We believe these products will keep us in a leadership
position in the marketplace.

We are also focusing on maintaining the Viewpoint VBX(TM) as an
architecturally viable product in the conferencing and distribution space,
providing specific industry applications and the extension of support for new
codecs.

We will continue integration efforts with third party application software
for our system products family. These new software tools are emerging as the
industry continues to grow.

COMPETITION

The market for video communication systems is highly competitive and
characterized by the frequent introduction of new products based upon innovative
technologies. We compete with numerous well-established manufacturers and
suppliers of videoconferencing, networking, telecommunications and multimedia
products, certain of which dominate the existing videoconferencing market for
such products.

11
<PAGE> 12

In addition, we are aware of others that are developing, and in some cases have
introduced, new video communications systems.

We are not aware of any direct competitors that compete in all of our
product families and applications. However, among our direct competitors
competing with one or more of our products or applications are Zydacron, Inc.,
VCON, Ltd., Winnov, LP., First Virtual Corporation, Picturetel Corporation,
Video Network Communications, Inc., VTEL Corporation, Pinnacle Systems, Inc.,
Tandberg Inc., and Polycom, Inc. In addition, electronics manufacturers such as
Intel Corp. and Cisco Systems, Inc. actively compete for business in this
market.

PATENTS, COPYRIGHTS, TRADEMARKS AND PROPRIETARY INFORMATION

We hold a U.S. patent covering certain aspects of compressed video. Although
we do not believe this patent or any other patent is essential to our business
operations, we may apply for additional patents relating to other aspects of our
products. We also rely on copyright laws to protect our software applications,
which we consider proprietary.

We believe that product recognition is an important competitive factor and,
accordingly, we promote the ViewCast(R), Osprey(R), YourVideoOnTheWeb(TM),
ViewCast Online(TM), Viewpoint VBX(TM), and WorkFone(R) names, among others, in
connection with our marketing activities, and have applied for or received
trademark registration for such names. Our use of those marks may be subject to
challenge by others, which, if successful, could have a material adverse effect
on us.

We also rely on confidentiality agreements with our directors, employees,
consultants and manufacturers and employ various methods to protect the source
codes, concepts, ideas, proprietary know-how and documentation of our
proprietary technology. However, such methods may not afford us complete
protection, and there can be no assurance that others will not independently
develop similar know-how or obtain access to our know-how or software codes,
concepts, ideas and documentation. Furthermore, although we have and expect to
continue to have confidentiality agreements with our directors, employees,
consultants, manufacturers, and appropriate vendors, there can be no assurance
that such arrangements will adequately protect our trade secrets.

We purchase certain components that are incorporated into our products from
third-party suppliers and rely on their assurances that such components do not
infringe on the patents of others. A successful claim against any components
used in our products could affect our ability to manufacture, supply and support
our products. We use commercially reasonable efforts to ensure third-party
supplied components are non-infringing, but there can be no assurances against
future claims.

GOVERNMENT REGULATION

We are subject to Federal Communications Commission regulations relating to
electromagnetic radiation from our products, which impose compliance burdens on
us. In the event we redesign or otherwise modify our products or complete the
development of new products, we will be required to comply with Federal
Communications Commission regulations with respect to such products. Our foreign
markets require us to comply with additional regulatory requirements.

EMPLOYEES

As of February 29, 2000, we had eighty-six (86) employees, five (5) of whom
are in executive positions, twenty-five (25) of whom are engaged in engineering,
research and development, thirty-two (32) of whom are engaged in marketing and
sales activities, eighteen (18) of whom are engaged in operations and six (6) of
whom are in finance and administration. None of our employees are represented by
a labor union. We consider our employee relations to be satisfactory.

12
<PAGE> 13

ITEM 2. DESCRIPTION OF PROPERTY

Our executive offices and some of our sales, design and development
activities are located in approximately 21,100 square feet of leased space in
Dallas, Texas. The lease expires in August of 2000 and provides for a base
annual rent of $316,512. Our assembly operations are located in approximately
4,065 square feet of leased space in Dallas, Texas. The lease expires in June of
2000 and provides for a base annual rent of $33,372. The leases expiring during
2000 will either be extended or new space will be obtained within the same
geographic area.

The Osprey(R) product design and development activities are located in
approximately 11,800 square feet of leased space in Morrisville, North Carolina.
The main lease for approximately 10,000 square feet expires in December 2002 and
provides for a base annual rent of $99,000. The remaining 1,800 square feet
expires in January of 2005 and provides for a base annual rent of $23,831. We
also lease office space for a sales office in Fairfax, Virginia consisting of
approximately 2,152 square feet of leased space. This lease expires in February
2001 and provides for base annual costs of $55,952. We believe that our
facilities are adequate for our current and reasonable foreseeable future needs
and our current facilities can accommodate expansion, as required.

ITEM 3. LEGAL PROCEEDINGS

We are not currently a party to any litigation that we believe could have a
material adverse effect on us or our business.

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

None

13
<PAGE> 14
PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

COMMON STOCK PRICE RANGE

Our Common Stock is traded on the Nasdaq under the symbol "VCST." Our Public
Warrants are traded on the Nasdaq under the symbol "VCSTW." As of February 29,
2000, there were 15,205,607 shares of Common Stock and 2,609,817 Public Warrants
outstanding. The following table sets forth, for the periods indicated, the high
and low sales prices for the Common Stock and the Public Warrants on the Nasdaq.
These over-the-counter market quotations reflect inter-dealer prices, without
retail mark-up, mark-down or commission and may not represent actual
transactions. The trading market in our securities may at times be relatively
illiquid due to low trading volume.

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
COMMON STOCK PUBLIC WARRANTS
- ------------------------------------------------------------------------------
FISCAL 1998 HIGH LOW HIGH LOW
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1st Quarter $ 5.00 $ 3.00 $ 1.88 $ 0.88
- ------------------------------------------------------------------------------
2nd Quarter 3.81 2.69 1.25 0.66
- ------------------------------------------------------------------------------
3rd Quarter 3.50 1.81 0.88 0.34
- ------------------------------------------------------------------------------
4th Quarter 3.69 0.88 1.69 0.25
- ------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
COMMON STOCK PUBLIC WARRANTS
- ------------------------------------------------------------------------------
FISCAL 1999 HIGH LOW HIGH LOW
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1st Quarter $ 6.94 $ 2.63 $ 3.69 $ 0.81
- ------------------------------------------------------------------------------
2nd Quarter 17.38 4.84 13.38 2.13
- ------------------------------------------------------------------------------
3rd Quarter 10.81 5.75 6.50 3.13
- ------------------------------------------------------------------------------
4th Quarter 8.38 3.06 5.25 1.81
- ------------------------------------------------------------------------------
</TABLE>

On March 20, 2000, the last reported sales prices for the Common Stock and
the Public Warrants as reported on the Nasdaq were $6.94 and $3.84,
respectively.

DIVIDEND POLICY

We have never paid cash dividends on our Common Stock. The Board of
Directors does not anticipate paying cash dividends in the foreseeable future as
it intends to retain future earnings to finance the expansion of our business
and for general corporate purposes. The payment of future cash dividends will
depend on such factors as our earnings levels, anticipated capital requirements,
operating and financial condition, consent from our lenders and other factors
deemed relevant by our Board of Directors.

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

OVERVIEW

ViewCast enables video communication over the Internet and other networks
through vertically-integrated components, systems, and turnkey solution products
and services. We are a leading global provider of enterprise-wide, digital video
communication solutions for both real-time and on-demand applications. We
deliver innovative networked video solutions, as well as systems that can work
with legacy video communication equipment. Our Osprey(R) video capture cards and
codecs, ViewCast(R) Encoding and Streaming Video System and Viewpoint VBX(TM)
System products deliver a wide array of video solutions for both digital and
analog video communication systems.

<PAGE> 15

users and small businesses enabling them to add video content to their web
sites.

RESULTS OF OPERATIONS

YEAR ENDED DECEMBER 31, 1999 COMPARED TO YEAR ENDED DECEMBER 31, 1998.

Net Sales. Net sales for the year ended December 31, 1999 decreased 9.4% to
$7,270,080 from $8,027,948 reported in 1998. The decrease can be attributed to a
decline in revenues for our video distribution systems offset in part by
increased revenues for our video peripheral and video streaming products during
1999 compared to 1998.

During the year ended December 31, 1999, sales of Osprey(R) video peripheral
products increased 38.4% over 1998 and represented 69.5% of total 1999 revenues,
compared to 45.5% of total revenues in 1998. Sales of ViewCast(R) video encoder
and video streaming systems represented 7.2% of total revenues since their
launch in the first quarter of 1999. Sales of Viewpoint VBX(TM) video
distribution systems decreased 63.8% in 1999, compared to 1998 and represented
approximately 21% of total 1999 revenues, compared to 52.6% of total revenues in
1998. The decline in Viewpoint VBX(TM) system sales can be attributed to a sharp
decrease in sales from two of our largest Viewpoint VBX(TM) resellers, who
changed the strategic focus of their companies, compounded by the loss of sales
representatives and directional leadership during our reorganization efforts. To
stimulate Viewpoint VBX(TM) sales in 2000, we have released new Viewpoint
VBX(TM) product enhancements and added a direct sales force to target specific
vertical markets.

Cost of Goods Sold. Cost of goods sold decreased $232,751 to $3,948,377 for
the year ended December 31, 1999 compared to 1998 primarily due to the decrease
in Viewpoint VBX(TM) video distribution sales described above. Our consolidated
gross profit margin for 1999 was 45.7%, representing a slight decline from the
47.9% margin reported during 1998. Excluding a charge of $275,000 to record a
lower of cost or market adjustment to inventory as a result of a new contractual
pricing from one of our major suppliers, gross profit margins showed an increase
of approximately 1.6% over 1998 levels due to improved product designs,
manufacturing efficiencies and direct sales of our Viewpoint VBX(TM) video
systems. Management expects profit margins to fluctuate based on product mix,
but over extended periods anticipates its margins will remain in the range of
46% -- 52%.

Selling, General and Administrative Expense. Selling, general, and
administrative expense decreased to $7,543,409 for the year ended December 31,
1999 from $8,352,476 reported during 1998 primarily due to our restructuring
efforts instituted in the fourth quarter of 1999 to reduce our sales staff and
sales administrative costs. The savings generated from the reduced sales
expenses during 1999 were offset in part by increases in marketing and customer
support expenditures. Administrative expenses during 1999 increased slightly
over 1998 levels after excluding the effects of a $610,000 bad debt write-off in
1998 that

15
<PAGE> 16

arose when a reseller failed to meet its financial obligations.

Research and Development Expense. Research and development expense decreased
$159,341 or 5.2% to $2,930,761 during 1999 compared to 1998, principally due to
development staff reductions initiated during the fourth quarter of 1998.

Other Income (Expense). For the year ended December 31, 1999, other income
(expense) decreased $139,587 to $704,121, primarily due to an increase in
interest income generated by higher average cash and cash equivalent balances
during the year. Interest expense increased approximately 8.7% over 1998 levels
due principally to the amortization of debt issue costs and interest associated
with our line of credit financing consummated in October 1998.

LIQUIDITY AND CAPITAL RESOURCES

Our primary sources of funds for conducting our business activities are from
sales of our products and from the sale of debt and equity securities. We
require liquidity and working capital primarily to fund operating losses,
increases in inventories and accounts receivable associated with sales growth,
development of our products, debt service and for capital expenditures.

Net cash used in operating activities for the year ended December 31, 1999
was $8,471,721 resulting primarily from a net loss of $8,473,674, which includes
non-cash operating expenses of $1,266,584, and changes in operating assets and
liabilities of $1,264,631.

Investing activities during 1999 utilized cash of $571,187 for capital
expenditures for computer equipment, test equipment and purchased software to
aid in the marketing, development and testing of our products.

During the year ended December 31, 1999, financing activities generated cash
in the amount of $12,919,097 resulting principally from the completion of our
private placement of Series B Convertible Preferred Stock which provided net
proceeds of $8,834,346. During 1999, we also received proceeds of $5,486,678
from the exercise of options and warrants and utilized cash in the amount of
$1,501,737 to retire short-term debt.

During September of 1998, we entered into a strategic business relationship
with TekInsight.com, Inc. ("TEKS"), formerly Tadeo Holdings, Inc., that involved
a stock purchase agreement whereby we acquired 1,240,310 shares of TEKS common
stock in exchange for 1,000,000 shares of our Common Stock. Because all of the
TEKS shares held by us will be available for trading under Rule 144 of the
Securities and Exchange Commission prior to December 31, 2000, we have presented
those shares at their fair market value on the balance sheet as of December 31,
1999. The quoted market price of TEKS registered common stock at December 31,
1999 and March 20, 2000 was $2.75 and $5.38 per share, respectively.

At December 31, 1999, we had working capital of $7,575,154 compared to
$1,452,778 at December 31, 1998 and cash and cash equivalents of $4,315,980 at
December 31, 1999 compared to $439,791 at December 31, 1998. We experienced an
overall decrease in sales during 1999 and anticipate that losses will continue
during 2000 and until such time as profit margins from the sales of our products
exceed our development, selling, administrative and financing costs. In October
of 1998, we entered into a working capital line of credit financing arrangement
for up to $9,000,000 with an entity controlled by one of our principal
stockholders, who is now also our Chairman of the Board. The availability of
funds under this facility is subject to certain borrowing base limitations based
principally on outstanding accounts receivable and inventory. At December 31,
1999, we had utilized $2.41 million of this facility and may further utilize the
facility to fund future growth. Additionally, during January and February of
2000, we received proceeds of $1,863,828 from the exercise of 621,276 private
warrants to purchase our Common Stock at $3.00 per share.

Should all the 2,609,817 redeemable public warrants and 1,466,664 redeemable
private warrants outstanding at December 31, 1999, be exercised, our proceeds
would aggregate $18,344,407. Each redeemable warrant entitles the warrant holder
to purchase 1.074 shares of Common Stock for $4.50 resulting in an effective
exercise price of $4.19 per share of Common Stock.

16
<PAGE> 17

During 2000, we expect to significantly increase our sales, marketing and
public relations efforts to promote both our new and existing product offerings,
and anticipate that additional capital will be required in the latter part of
2000 to effectively do so. We have had preliminary discussions with several
potential sources of additional financing and may seek additional financing to
provide working capital in the future. Such financing may include the issuance
of convertible debt, convertible preferred stock or other equity securities in
exchange for a cash investment in us. There can be no assurance that any such
additional financing will be available to us on acceptable terms, or at all.
Additional equity financing may involve substantial dilution to our then
existing stockholders. In the event we are unable to raise additional capital,
we may be required to substantially reduce or curtail our activities.

At December 31, 1999, we had no material commitments for capital
expenditures.

YEAR 2000 COMPLIANCE

In prior years, we discussed the nature and progress of our plans to become
Year 2000 ready. In late 1999, we completed our remediation and testing of
systems. As a result of those planning and implementation efforts, we
experienced no significant disruptions in mission critical information
technology and non-information technology systems and believe those systems
successfully responded to the Year 2000 date change. We expensed approximately
$15,000 during 1999 in connection with remediating our systems. We are not aware
of any material problems resulting from Year 2000 issues, either with our
products, our internal systems, or the products and services of third parties.
We will continue to monitor our mission critical computer applications and those
of our suppliers and vendors throughout the year 2000 to ensure that any latent
Year 2000 matters that may arise are addressed promptly.

17
<PAGE> 18

ITEM 7. FINANCIAL STATEMENTS

VIEWCAST.COM, INC. AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<S> <C>
Report of Independent Auditors..........................................19

Consolidated Balance Sheets at December 31, 1998 and 1999...............20

Consolidated Statements of Operations for the years ended
December 31, 1998 and 1999.............................................21

Consolidated Statements of Stockholders' Equity for the
years ended December 31, 1998 and 1999.................................22

Consolidated Statements of Cash Flows for the years ended
December 31, 1998 and 1999.............................................23

Notes to Consolidated Financial Statements..............................24
</TABLE>

18
<PAGE> 19
Report of Independent Auditors

The Board of Directors
ViewCast.com, Inc.

We have audited the accompanying consolidated balance sheets of ViewCast.com,
Inc. and subsidiaries as of December 31, 1998 and 1999, and the related
consolidated statements of operations, stockholders' equity and cash flows for
the years then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
ViewCast.com, Inc. and subsidiaries at December 31, 1998 and 1999, and the
consolidated results of their operations and their cash flows for the years then
ended in conformity with accounting principles generally accepted in the United
States.

Dallas, Texas ERNST & YOUNG LLP
February 18, 2000

19
<PAGE> 20

VIEWCAST.COM, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------
1998 1999
------------ ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 439,791 $ 4,315,980
Available-for-sale securities -- 3,410,853
Accounts receivable, less allowance for doubtful accounts of
$823,000 and $117,000 at December 31, 1998 and 1999, respectively 1,839,783 1,386,395
Stock subscription receivable 3,400,000 --
Inventory 3,110,588 2,526,096
Prepaid expenses 90,646 93,598
Deferred charges, principally deferred debt issue costs 568,252 --
------------ ------------
Total current assets 9,449,060 11,732,922

Property and equipment, net 1,382,044 1,338,143
Software development costs, net 431,500 429,502
Deferred charges 213,048 --
Investment in equity securities 2,000,000 --
Deposits 135,938 64,815
------------ ------------

Total assets $ 13,611,590 $ 13,565,382
============ ============

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 2,847,807 $ 662,247
Accrued compensation 326,169 418,360
Deferred revenue 157,891 270,779
Accrued restructuring charges 275,000 --
Other accrued liabilities 488,337 392,713
Short-term debt, officer 96,285 --
Shareholder line of credit 3,687,513 2,408,827
Short-term debt, other 117,280 4,842
------------ ------------
Total current liabilities 7,996,282 4,157,768

Long-term debt 1,360,000 --

Commitments

Stockholders' equity:
Convertible preferred stock, $.0001 par value:
Authorized shares - 5,000,000
Series A - issued and outstanding shares - 334,000 and none at
December, 31, 1998 and 1999, respectively 33 --
Series B - issued and outstanding shares - 400,000 and 945,000
at December 31, 1998 and 1999, respectively 40 95
Common stock, $.0001 par value:
Authorized shares - 30,000,000 and 40,000,000 at
December 31, 1998 and 1999, respectively
Issued and outstanding shares - 11,324,974 and 14,624,898
at December 31, 1998 and 1999, respectively 1,132 1,463
Additional paid-in capital 31,947,418 44,889,810
Unrealized gain on securities reported at fair value and accumulated
other comprehensive income -- 1,410,853
Accumulated deficit (27,681,409) (36,882,701)
Treasury stock, 261,497 shares at December 31, 1998 and 1999 (11,906) (11,906)
------------ ------------
Total stockholders' equity 4,255,308 9,407,614
------------ ------------

Total liabilities and stockholders' equity $ 13,611,590 $ 13,565,382
============ ============
</TABLE>

See accompanying notes.

20
<PAGE> 21

VIEWCAST.COM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------
1998 1999
------------ ------------
<S> <C> <C>
NET SALES $ 8,027,948 $ 7,270,080

Cost of goods sold 4,181,128 3,948,377
------------ ------------

GROSS PROFIT 3,846,820 3,321,703

Operating expenses:
Selling, general and administrative 8,352,476 7,543,409
Research and development 3,090,102 2,930,761
Restructuring charge 402,800 --
Depreciation and amortization 524,427 617,086
------------ ------------
Total operating expenses 12,369,805 11,091,256
------------ ------------

OPERATING LOSS (8,522,985) (7,769,553)

Other income (expense):
Dividend and interest income 34,117 249,985
Interest expense (877,873) (954,168)
Other 48 62
------------ ------------
Total other income (expense) (843,708) (704,121)
------------ ------------

NET LOSS $ (9,366,693) $ (8,473,674)
============ ============

NET LOSS PER SHARE - BASIC AND DILUTED $ (1.02) $ (0.71)
============ ============

WEIGHTED AVERAGE NUMBER OF COMMON SHARES
outstanding 9,367,537 13,105,884
============ ============
</TABLE>

See accompanying notes.

21
<PAGE> 22

VIEWCAST.COM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1999

<TABLE>
<CAPTION>
CONVERTIBLE ADDITIONAL
PREFERRED STOCK COMMON STOCK PAID-IN
SHARES PAR VALUE SHARES PAR VALUE CAPITAL
---------- --------- ---------- --------- ------------
<S> <C> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1997 -- $ -- 8,995,455 $ 900 $ 19,628,703

Conversion of long-term debt to
convertible preferred stock - Series A 364,000 36 -- -- 2,903,604

Sale of convertible preferred stock -
Series B 400,000 40 -- -- 3,999,960

Conversion of convertible preferred
stock - Series A to common stock (30,000) (3) 82,770 8 (5)

Common stock issued in exchange
for equity securities -- -- 1,000,000 100 1,999,900

Exercise of options and warrants -- -- 1,043,374 104 2,185,392

Sale of common stock, employee
stock purchase plan -- -- 73,787 7 139,109

Value of options and warrants
issued for consulting services -- -- -- -- 461,851

Warrants issued for inducement
of debt -- -- -- -- 266,000

Accelerated vesting of employee
stock options in connection with
restructuring -- -- -- -- 127,800

Common stock issued for
consulting services -- -- 73,443 7 133,389

Convertible preferred stock
dividends - Series A -- -- 56,145 6 101,715

Net loss and comprehensive loss -- -- -- -- --

---------- ------ ---------- ------ ------------
BALANCE, DECEMBER 31, 1998 734,000 73 11,324,974 1,132 31,947,418

Sale of convertible preferred stock -
Series B, net 545,000 55 -- -- 5,434,291

Conversion of convertible preferred
stock - Series A to common stock (334,000) (33) 921,505 92 (59)

Conversion of 8% convertible notes
to common stock -- -- 317,313 32 1,162,818

Exercise of options and warrants -- -- 1,885,332 189 5,486,491

Value of options and warrants
issued for consulting services -- -- -- -- 65,347

Sale of common stock, employee
stock purchase plan -- -- 44,220 4 99,806

Other -- -- -- -- (14,330)

Convertible preferred stock
dividends - Series A and B -- -- 131,554 14 708,028

Unrealized gain on securities reported
at fair value -- -- -- -- --
Net loss -- -- -- -- --

Comprehensive loss

---------- ------ ---------- ------ ------------
BALANCE, DECEMBER 31, 1999 945,000 $ 95 14,624,898 $1,463 $ 44,889,810
========== ====== ========== ====== ============

<CAPTION>
OTHER TOTAL
COMPREHENSIVE ACCUMULATED TREASURY STOCKHOLDERS'
INCOME DEFICIT STOCK EQUITY
------------- ------------ -------- -------------
<S> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1997 $ -- $(18,199,433) $(11,906) $ 1,418,264

Conversion of long-term debt to
convertible preferred stock - Series A -- -- -- 2,903,640

Sale of convertible preferred stock -
Series B -- -- -- 4,000,000

Conversion of convertible preferred
stock - Series A to common stock -- -- -- --

Common stock issued in exchange
for equity securities -- -- -- 2,000,000

Exercise of options and warrants -- -- -- 2,185,496

Sale of common stock, employee
stock purchase plan -- -- -- 139,116

Value of options and warrants
issued for consulting services -- -- -- 461,851

Warrants issued for inducement
of debt -- -- -- 266,000

Accelerated vesting of employee
stock options in connection with
restructuring -- -- -- 127,800

Common stock issued for
consulting services -- -- -- 133,396

Convertible preferred stock
dividends - Series A -- (115,283) -- (13,562)

Net loss and comprehensive loss -- (9,366,693) -- (9,366,693)

---------- ------------ -------- -----------
BALANCE, DECEMBER 31, 1998 -- (27,681,409) (11,906) 4,255,308

Sale of convertible preferred stock -
Series B, net -- -- -- 5,434,346

Conversion of convertible preferred
stock - Series A to common stock -- -- -- --

Conversion of 8% convertible notes
to common stock -- -- -- 1,162,850

Exercise of options and warrants -- -- -- 5,486,680

Value of options and warrants
issued for consulting services -- -- -- 65,347

Sale of common stock, employee
stock purchase plan -- -- -- 99,810

Other -- -- -- (14,330)

Convertible preferred stock
dividends - Series A and B -- (727,618) -- (19,576)

Unrealized gain on securities reported
at fair value 1,410,853 -- -- 1,410,853
Net loss -- (8,473,674) -- (8,473,674)
-----------
Comprehensive loss (7,062,821)

---------- ------------ -------- -----------
BALANCE, DECEMBER 31, 1999 $1,410,853 $(36,882,701) $(11,906) $ 9,407,614
========== ============ ======== ===========
</TABLE>

See accompanying notes.

22
<PAGE> 23

VIEWCAST.COM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
1998 1999
------------ ------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net loss $ (9,366,693) $ (8,473,674)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation of fixed assets 380,742 496,169
Amortization of software development costs 143,685 120,917
Non-cash charges to interest expense 289,885 584,151
Non-cash charge to restructuring costs 127,800 --
Non-cash consulting fees exchanged for options, warrants
and common stock 595,247 65,347
Changes in operating assets and liabilities:
Accounts receivable (644,553) 453,388
Inventory (1,348,402) 584,492
Prepaid expenses (15,550) (2,952)
Deferred charges (598,132) --
Deposits (98,947) 71,123
Accounts payable 2,088,488 (2,185,560)
Accrued compensation 12,535 92,191
Accrued restructuring charges 275,000 (275,000)
Deferred revenue 105,107 112,888
Other accrued liabilities 131,723 (115,201)
------------ ------------
Net cash used in operating activities (7,922,065) (8,471,721)
------------ ------------

INVESTING ACTIVITIES:
Purchase of property and equipment, net (885,350) (452,268)
Software development costs (371,323) (118,919)
Other -- --
------------ ------------
Net cash used in investing activities (1,256,673) (571,187)
------------ ------------

FINANCING ACTIVITIES:
Net proceeds from convertible preferred stock - Series B 600,000 8,834,346
Net proceeds from shareholder line of credit 3,687,513 --
Repayment of short-term debt-officer (214,958) (96,285)
Repayment of shareholder line of credit, net -- (1,278,685)
Short-term debt, other 104,160 (126,767)
Proceeds from exercise of options and warrants 2,185,496 5,486,678
Net proceeds from sale of common stock and warrants 139,116 99,810
------------ ------------
Net cash provided by financing activities 6,501,327 12,919,097
------------ ------------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (2,677,411) 3,876,189

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 3,117,202 439,791
------------ ------------

CASH AND CASH EQUIVALENTS, END OF PERIOD $ 439,791 $ 4,315,980
============ ============
</TABLE>

See accompanying notes.

23
<PAGE> 24
VIEWCAST.COM, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1. THE COMPANY AND DESCRIPTION OF BUSINESS

The accompanying consolidated financial statements include the accounts of
ViewCast.com, Inc. (VCST), and its wholly-owned subsidiaries, Viewpoint Systems,
Inc. (Viewpoint), VideoWare, Inc. (VideoWare) and Osprey Technologies, Inc.
(Osprey) (collectively, the Company). The Company operates in one business
segment and is engaged in designing, developing and marketing advanced,
standards-based video products that enable video communication over the Internet
and corporate networks. The Company's Viewpoint VBX(TM) video distribution
system, Osprey(R) line of video peripheral products and video
compression-decompression cards and ViewCast(R) line of Internet encoding and
streaming video servers deliver business applications for video conferencing,
video broadcasting, video-based training, distance learning, telemedicine,
surveillance and Internet and intranet video communications. The Company markets
its products directly to end-users, through original equipment manufacturers,
value-added resellers and computer system integrators, worldwide. Effective
April 8, 1999, the Company changed its name from MultiMedia Access Corporation
to ViewCast.com, Inc. to better reflect its current and anticipated future
business operations. Accordingly, prior references to MultiMedia Access
Corporation in the accompanying financial statements and notes have been changed
to reflect the Company's new name.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPALS OF CONSOLIDATION

The consolidated financial statements include the accounts of the Company
and all of its subsidiaries. All material inter-company accounts and
transactions have been eliminated in consolidation.

CASH AND CASH EQUIVALENTS

The Company considers all highly liquid investments purchased with an
initial maturity of three months or less to be cash equivalents.

INVENTORY

Inventory consists primarily of purchased electronic components and computer
system products, along with the related documentation manuals and packaging
materials. Inventory is carried at the lower of cost or market, cost being
determined on a standard cost basis, which approximates average cost.

PROPERTY AND EQUIPMENT

Property and equipment is recorded at cost. Depreciation is determined using
the straight-line method over the estimated useful lives, generally three to
five years, of the related assets. Leasehold improvements are amortized over the
lives of the related leases. Expenditures for repairs and maintenance are
charged to operations as incurred; renewals and betterments are capitalized.

SOFTWARE DEVELOPMENT COSTS

Costs of developing new software products and substantial enhancements to
existing software products are expensed as incurred until technological
feasibility has been established, after which time additional costs incurred are
capitalized in accordance with Statement of Financial Accounting Standards No.
86, "Accounting for the Costs of Computer Software to be Sold, Leased, or
Otherwise Marketed." Amortization of capitalized software development costs
begins when products are available for general release to customers, and is
computed using the straight-line method over a period not to exceed three years.

24
<PAGE> 25
VIEWCAST.COM, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

REVENUE RECOGNITION

Revenue from the sale of video communication systems and products and
licensing of the related software is recognized upon shipment to customers. The
Company maintains an accrued warranty reserve for products which are returned
defective during the warranty period.

NET LOSS PER SHARE

Basic earnings per share is calculated by dividing net loss by the number of
weighted average common shares outstanding for the period. Since the Company has
reported net losses for all periods presented, the computation of diluted loss
per share excludes the effects of convertible debt, options, and warrants since
their effect is anti-dilutive. (See Note 10.)

Loss per share calculations for the years ended December 31, 1998 and 1999
are as follows:

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
-----------------------------------
1998 1999
--------------- ----------------
<S> <C> <C>
Net loss $ (9,366,693) $ (8,473,674)

Preferred dividends and accretion of
issue costs (175,945) (778,381)
--------------- ----------------

Net loss applicable to common shareholders $ (9,542,638) $ (9,252,055)
=============== ================

Weighted average number of common shares
outstanding 9,367,537 13,105,884
=============== ================

Loss per share as reported in the financial
statements: basic and diluted $ (1.02) $ (0.71)
=============== ================
</TABLE>

DEFERRED CHARGES AND OTHER ASSETS

Deferred charges at December 31, 1998 consisted of legal, accounting and
lead manager fees and expenses associated with the issuance of 8% senior
convertible notes in December 1997 as well as fees and expenses associated with
the procurement of a $9 million working capital credit facility in October of
1998. During August 1998, the Company exchanged $3.64 million of its 8% senior
convertible notes for newly created shares of Series A convertible preferred
stock and, accordingly, a proportionate share of issue costs in the amount
$736,359 were charged against the exchange proceeds. Net debt issue costs at
December 31, 1998 were $781,300 of which $568,252 was classified as current.
During 1999, $197,149 of issue costs associated with the conversion of 8% senior
convertible notes to common stock of the Company, was charged against additional
paid-in capital.

Deferred charges amortized to interest expense for the years ended December
31, 1998 and 1999 were $289,885, and $584,151, respectively.

25
<PAGE> 26

VIEWCAST.COM, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

CONCENTRATION OF CREDIT RISK

Financial instruments that potentially subject the Company to credit risk
consist principally of cash, cash equivalents and trade accounts receivable. The
Company invests its cash and cash equivalents with a Texas commercial bank and a
commercial brokerage firm. The brokerage firm maintains accounts in several
banks throughout the country and in government securities. The Company sells its
products and services primarily to distributors and resellers without requiring
collateral; however, the Company routinely assesses the financial condition of
its customers and maintains allowances for anticipated losses. During the years
ended December 31, 1998 and 1999, three customers accounted for 41% and one
customer accounted for 23% of total consolidated revenues, respectively.
Balances due from these customers at December 31, 1998 and 1999 represented 39%
and 8% of net accounts receivable, respectively. The receivable was written off
against the reserve at December 31, 1999. The Company believes it has no
significant credit risk in excess of provided reserves.

USE OF ESTIMATES

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

INCOME TAXES

The Company utilizes the liability method of accounting for income taxes
wherein deferred tax assets and liabilities are determined based upon the
differences between the financial statement and tax bases of assets and
liabilities, as measured by enacted tax rates expected to be in effect when
these differences reverse.

ADVERTISING COSTS

Advertising costs are expensed as incurred. Advertising expense for the
years ended December 31, 1998 and 1999 was $353,024 and $448,859, respectively.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company believes that the carrying amount of certain of its financial
instruments, which include cash equivalents, accounts receivable, accounts
payable, short-term debt and accrued expenses approximate fair value due to the
short-term maturities of these instruments. At December 31, 1999,
available-for-sale securities consist of the investment in equity securities of
a strategic business alliance partner, and are stated at fair market value as
determined by quoted market prices. Gross unrealized gains, which have been
included as a separate component of stockholders' equity, were $1,410,853 at
December 31, 1999. No unrealized holding gains or losses were included in
earnings during the years ended December 31, 1998 and 1999 (See Note 5).

STOCK-BASED COMPENSATION

In October 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 123 (SFAS 123), Accounting for Stock-Based
Compensation. SFAS 123 defines a fair-value based method of accounting for an
employee stock option or similar equity instrument. As permitted by SFAS 123,
the Company has elected to continue to measure the cost of its stock-based
compensation plans using the intrinsic-value based method of accounting
prescribed by Accounting Principles Board Opinion No. 25, Accounting for Stock
Issued to Employees. See Note 10 to the Consolidated Financial Statements for
additional information concerning stock-based compensation.

26
<PAGE> 27
VIEWCAST.COM, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

SEGMENT REPORTING

Under Statement of Financial Accounting Standards No. 131 (SFAS 131),
Disclosures about Segments of an Enterprise and Related Information, the Company
operated, for all periods presented, in a single segment.

COMPREHENSIVE INCOME

Statement of Financial Accounting Standards No. 130 (SFAS 130), Reporting
Comprehensive Income requires that total comprehensive income be disclosed with
equal prominence as net income and earnings per share. Comprehensive income is
defined as changes in stockholders' equity exclusive of transactions with owners
such as capital contributions and dividends. The Company had no elements of
comprehensive income during the year ended December 31, 1998. At December 31,
1999, the Company had gross unrealized gains on available-for-sale securities of
$1,410,853 (See Note 5).

IMPAIRMENT OF LONG-LIVED ASSETS

In accordance with Statement of Financial Accounting Standards No. 121 (SFAS
121), Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed of, the Company reviews its long-lived assets for
impairment when events or changes in circumstances indicate that the carrying
value of such assets may not be recoverable. This review consists of a
comparison of the carrying value of the asset with the asset's expected future
undiscounted cash flows without interest costs. Estimates of expected future
cash flows represent management's best estimate based on reasonable and
supportable assumptions and projections. If the expected future cash flow
exceeds the carrying value of the asset, no impairment is recognized. If the
carrying value of the asset exceeds the expected future cash flows, impairment
is measured by the excess of the carrying value over the fair value of the
asset. Any impairment provisions recognized are permanent and may not be
restored in the future. Impairment expense of $30,000 was recognized in 1998,
and is included as a component of the 1998 restructuring charge (See Note 3).
The Company recognized no material impairment expense during 1999.

NEW ACCOUNTING STANDARDS

In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133 (SFAS 133), Accounting for Derivative
Instruments and Hedging Activities. SFAS 133 is effective commencing in the
Company's fiscal year 2001. SFAS 133 requires that all derivative instruments be
recorded on the balance sheet at fair value. Changes in the fair value of
derivatives are recorded each period in current earnings or other comprehensive
income, depending on whether a derivative is designated as part of a hedge
transaction and the type of hedge transaction. The ineffective portion of all
hedges will be recognized in earnings. The Company's management is currently
evaluating the impact of the statement.

3. BUSINESS RESTRUCTURING

Results of operations for 1998 include charges of $402,800 for resizing and
restructuring the Company's operations and workforce. The charges were recorded
in the fourth quarter of 1998 in accordance with a plan of restructuring
approved by the Company's Board of Directors. Charges included severance costs
for work force reductions of 16 employees including two Executive Officers of
the Company, closure of three sales offices and losses on impairment of certain
assets. Personnel reductions were made in the Company's sales, development and
finance and administration departments in an effort to reduce operating
expenses. At December 31, 1998 the Company had $275,000 of accrued restructuring
charges consisting principally of severance that was paid during 1999.

27
<PAGE> 28
VIEWCAST.COM, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

4. INVENTORY

Inventory consists of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------
1998 1999
---------- ----------
<S> <C> <C>
Purchased materials $ 815,999 $ 766,553
Work in progress 108,639 --
Finished goods 2,185,950 1,759,543
---------- ----------
$3,110,588 $2,526,096
========== ==========
</TABLE>

Inventory at December 31, 1998 and 1999 is presented net of reserves of
$199,255 and $346,153 for obsolete, slow moving and damaged inventory.

5. INVESTMENT IN EQUITY SECURITIES

In September 1998, the Company entered into a strategic business alliance
with TEKS that included a stock purchase agreement whereby the Company acquired
1,240,310 shares of TEKS common stock in exchange for 1,000,000 shares of the
Company's common stock. As specified in the purchase agreement, the number of
shares exchanged was determined by dividing $2,000,000 by the average closing
price per share of each company's common stock for the five trading days prior
to September 24, 1998. The shares issued by the Company and TEKS are not
registered under the Securities Act of 1933, as amended, and may not be sold,
transferred or otherwise distributed in the absence of such registration or an
applicable exemption therefrom.

At December 31, 1998, the Company valued its entire investment in TEKS
common stock at cost due to limitations imposed by Rule 144 of the Securities
and Exchange Commission limiting all trading for the first two years that the
stock is held. At December 31, 1999, all TEKS common stock will be available for
sale within the next twelve months; and accordingly, it has been classified as a
current asset and stated at fair market value of $2.75 per share as determined
by quoted market prices. At February 18, 2000, the quoted market price of TEKS
registered shares was $4.43.

6. PROPERTY AND EQUIPMENT

Property and equipment, at cost, consists of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------------
1998 1999
----------- -----------
<S> <C> <C>
Computer equipment $ 1,397,444 $ 1,702,786
Software 374,403 471,103
Leasehold improvements 100,779 100,779
Office furniture and equipment 441,080 491,227
----------- -----------
2,313,706 2,765,895
Less accumulated depreciation
and amortization (931,662) (1,427,752)
----------- -----------
$ 1,382,044 $ 1,338,143
=========== ===========
</TABLE>

28
<PAGE> 29
VIEWCAST.COM, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

7. SHORT-TERM DEBT

Short-term debt consists of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------
1998 1999
---------- ----------
<S> <C> <C>
OFFICER:
Unsecured note payable to an officer and affiliate
of the Company, due on demand with interest at 15% $ 96,285 --
========== ==========

OTHER:
Fully secured $9,000,000 working capital credit
facility payable to a principal shareholder of the
Company, with interest payable monthly at 12% $3,687,513 $2,408,827

Other 117,280 4,842
---------- ----------
$3,804,793 $2,413,669
========== ==========
</TABLE>

In October 1998, the Company entered into a working capital line of credit
facility for up to $9 million with an entity controlled by one of its principal
shareholders, H.T. Ardinger, Jr. This one year, renewable facility, which
contains terms more favorable than the Company's prior facility, bears interest
at 12% per annum and is secured by all assets of the Company. The availability
of funds under this facility is subject to certain borrowing base limitations
based principally on qualifying accounts receivable and inventory. A portion of
the proceeds from this facility was used to retire the Texas commercial bank
line of credit. As an incentive to advance the line of credit, Mr. Ardinger was
issued 200,000 three-year warrants to purchase Company stock at $4.50 per share.
The value of the warrants of $1.33 per share, as determined using the
Black-Scholes option valuation model, is being charged to interest expense over
the term of the note.

At December 31, 1998, the Company had $96,285 of 15% notes outstanding to
its former Chief Executive Officer. The 15% notes were due on demand with
interest payable monthly and were paid during January 1999.

Interest paid was $528,301 and $422,169 for the years ended December 31,
1998 and 1999, respectively.

8. LONG-TERM DEBT

Long-term debt consists of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------
1998 1999
----------- -----------
<S> <C> <C>
Senior 8% convertible notes issued December 9, 1997
due December 2002 with interest payable
semi-annually in arrears. $ 1,360,000 $ --
=========== ===========
</TABLE>

On December 9, 1997 the Company sold $5,000,000 aggregate principal amount
of 8% senior convertible notes due 2002 (the "Notes") at an initial offering
price of 100% of the principal amount thereof, less 8% gross commission. The
Notes were convertible to common stock of the Company at the initial conversion
price of $4.625 per share. The Notes ranked senior to all existing and future
subordinated obligations and ranked pari passu with all senior indebtedness of
the Company, except to the extent of any collateral securing such debt. Lead
managers in connection with the Notes offering received 108,108

29
<PAGE> 30
VIEWCAST.COM, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

warrants to purchase Company stock at an exercise price of $4.625 per share. In
December 1997, the Company received net proceeds of $4,168,000 from the Notes
offering.

In August 1998, the Company exchanged $3,640,000 of its 8% senior
convertible notes for 364,000 shares of a newly created Series A convertible
preferred stock. The Series A preferred stock carried a dividend of 8.5% per
year payable in cash or common stock of the Company, at the Company's option,
and was convertible into Common Stock of the Company at a fixed conversion price
of $3.625 per share (subject to certain conditions).

In February through April 1999, holders of $1,360,000 principal amount of
8% convertible notes exchanged their notes for 317,313 shares of common stock of
the Company at conversion prices ranging from of $3.625 to $4.625 per share
completing the exchange of all 8% convertible notes outstanding at December 31,
1998.

9. INCOME TAXES

The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards No. 109 (SFAS 109), Accounting for Income Taxes.
SFAS 109 requires a valuation allowance to be recorded when it is "more likely
than not that some portion or all of the deferred tax assets will not be
realized." In the opinion of management, realization of the Company's net
operating loss carryforward is not reasonably assured, and a valuation allowance
of $9,327,000 and $12,492,000 has been provided against deferred tax assets in
excess of deferred tax liabilities in the accompanying consolidated financial
statements at December 31, 1998 and 1999, respectively.

The components of the Company's net deferred taxes are as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------------
1998 1999
------------ ------------
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforward $ 8,182,000 $ 11,830,000
Revenue deferred for financial statements, recognized
for tax 38,000 80,000
Excess of tax over financial statement basis of
patent 33,000 30,000
Accruals deductible for tax purposes when paid 606,000 399,000
Excess of tax over financial statement basis of software
development costs 532,000 754,000
------------ ------------
Total deferred tax assets 9,391,000 13,093,000
Less: valuation allowance (9,327,000) (12,492,000)
------------ ------------
64,000 601,000
Deferred tax liabilities:
Excess of financial statement over tax basis of
of property and equipment 64,000 480,000
------------ ------------
Total deferred tax liabilities 64,000 121,000
============ ============
Net deferred taxes $ -- $ --
============ ============
</TABLE>

30
<PAGE> 31
VIEWCAST.COM, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

A reconciliation between the federal income tax benefit calculated by
applying U.S. federal statutory rates to net loss and the absence of a tax
benefit reported in the accompanying consolidated financial statements is as
follows:

<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------------
1998 1999
----------- -----------
<S> <C> <C>
U.S. federal statutory rate applied to pretax loss $(3,185,000) $(2,881,000)
State tax net of federal benefit (281,000) (219,000)
Change in valuation allowance 2,611,000 3,165,000
Net operating loss carryforward adjustment 734,000 (761,000)
Unrealized gain on securities reported at fair value -- 480,000
Other 121,000 216,000
----------- -----------
$ -- $ --
=========== ===========
</TABLE>

At December 31, 1999 the Company has federal income tax net operating loss
carryforwards of approximately $31,400,000 which expire as follows:

<TABLE>
<CAPTION>
YEAR
ENDED AMOUNT
----- ------
<S> <C>
2009 $ 2,700,000
2010 4,700,000
2011 4,000,000
2012 5,200,000
2018 7,400,000
2019 7,400,000
</TABLE>

The Company is subject to limitations existing under Internal Revenue Code
Section 382 (Change of Control) relating to the availability of the operating
loss carryforward. Beginning with 1994, utilization of approximately $21,000,000
of the carryforward is subject to annual limitations.

No income taxes were paid during the years ended December 31, 1998 and
1999.

10. STOCKHOLDERS' EQUITY

PREFERRED STOCK

In August 1998, the Company exchanged $3,640,000 of its 8% senior
convertible notes for 364,000 shares of its newly created Series A convertible
preferred stock. The Series A preferred stock carries a dividend of 8.5% per
year payable in cash or common stock of the Company, at the Company's option,
and is convertible into Common Stock of the Company at a fixed conversion price
of $3.625 per share (subject to certain conditions).

In December 1998 through February 1999, the Company received net proceeds of
$8,834,346 from the private placement of 945,000 shares of a newly created
Series B convertible preferred stock at $10 per share. Two principal
shareholders of the Company each purchased $4,000,000 of the Series B offering
and other existing shareholders purchased the balance of $1,450,000. The Series
B preferred stock is convertible into common stock of the Company at a fixed
price of $3.625 per share, subject to certain requirements, and carries a
dividend of 8% per year payable in cash or common stock of the Company, at the
Company's option. At December 31, 1998, the Company had received a $4,000,000
subscription for the Series B preferred stock from H.T. Ardinger Jr., a
principal shareholder and Chairman of the Board of the

31
<PAGE> 32

VIEWCAST.COM, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

Company, of which $600,000 was paid in December 1998 and the balance of
$3,400,000 was classified as a stock subscription receivable at December 31,
1998 and paid January 27, 1999.

Holders of the Series A and Series B preferred stock have no voting rights
except on amendments to the Company's Articles of Incorporation to change the
authorized shares, or par value, or to alter or change the powers or preferences
of their respective preferred stock issues. Additionally, the holders of Series
A preferred stock have Board of Director representation privileges in instances
of dividend default by the Company.

COMMON STOCK

In September 1998, holders of 30,000 shares of Series A preferred stock
converted their shares into 82,770 shares of common stock of the Company. In
January through August 1999, holders of 334,000 shares of Series A preferred
stock converted their shares into 921,505 shares of common stock completing the
conversion of all outstanding shares Series A preferred stock.

In June through December of 1998, the Company received $343,225 in proceeds
from the exercise of 343,225 warrants to purchase Company common stock at an
exercise price of $1.00 per share. During 1999, the Company received $1,922,037
from the exercise of 525,791 warrants with exercise prices ranging from $3.00 to
$4.19 per share.

During 1998, the Company received proceeds of $37,275 from the exercise of
66,817 stock options with exercise prices ranging from $.04 to $3.00 per share.
During 1999, the Company received $3,564,641 from the exercise of 1,333,622
stock options with exercise prices ranging from $0.10 to $5.84 per share.

In September 1998, the Company entered into a strategic business alliance
with TEKS, whereby the Company acquired 1,240,310 shares of TEKS common stock in
exchange for 1,000,000 shares of the Company's common stock. The number of
Company shares exchanged was determined by dividing $2,000,000 by the average
closing price per share of the Company's common stock for the five trading days
prior to September 24, 1998 which was $2.00 per share (see Note 5).

During 1998 and 1999, the Company issued 59,230 shares of Company common
stock to Series A preferred shareholders of record on December 1, 1998 as
payment of $107,310 of 8.5% accrued dividends from August 17, 1998 through
December 15, 1998. During 1999, the Company issued 2,461 shares of common stock
to Series A preferred shareholders of record on June 1, 1999 as payment of
$21,192 of 8.5% dividends accrued for the six months ended June 15, 1999. Series
A preferred dividends were paid semi-annually on June 15th and December 15th of
each year in cash or, at the option of the Company, in common stock. The common
stock is valued at the average of the market prices for the 20 consecutive stock
exchange business days ending ten stock exchange business days prior to the
dividend payment date. The computed common stock value at December 15, 1998 and
June 15, 1998 was $1.81 and $8.61 per share, respectively.

During 1999, the Company issued 34,127 shares of Company common stock to
Series B preferred shareholders of record on June 1, 1999 as payment of $293,841
of 8.0% accrued dividends for the six months ended June 15, 1999. During 1999,
the Company also issued 91,881 shares of common stock to Series B preferred
shareholders of record on December 1, 1999 as payment of $379,035 of 8.0%
dividends accrued for the six months ended December 15, 1999. Series B preferred
dividends are paid semi-annually on June 15th and December 15th of each year in
cash or, at the option of the Company, in common stock. The common stock is
valued at the average of the market prices for the 20 consecutive stock exchange
business days ending ten stock exchange business days prior to the dividend
payment date. The computed common stock value at June 15, 1999 and December 15,
1999 was $8.61 and $4.13 per share, respectively.

During 1998 the Company issued 73,443 shares of common stock to various
consultants in exchange for financial services. The number of common shares
issued was determined by dividing the fair market value of services by an
average of the common stock market prices on the date of issuance. Total value

32
<PAGE> 33

VIEWCAST.COM, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

of the consulting services provided during 1998 amounted to $133,396 and prices
for common stock shares issued ranged from $1.77 to $2.81 per share.

During 1998, the Company received $139,117 in proceeds from the sale of
73,787 shares of common stock to employees under the terms of the Company's
Employee Stock Purchase Plan. The employee purchase price for the offering
periods ended April 30, 1998 and October 31, 1998 was $2.62 and $1.50 per share,
respectively.

During 1999, the Company received $99,810 in proceeds from the sale of
44,220 shares of common stock to employees under the terms of the Company's
Employee Stock Purchase Plan. The employee purchase price for the offering
periods ended April 30, 1999 and October 31, 1999 was $1.46 and $3.85 per share,
respectively.

In May 1999, the Company registered, in a Registration Statement on Form
S-3, 7,933,463 shares of common stock underlying non-redeemable common stock
purchase warrants and publicly traded redeemable common stock purchase warrants
for offer and sale by the persons holding the warrants. The Company also
registered 290,360 shares of common stock underlying warrants held by Network 1
Financial Securities, Inc. received as compensation for services as managing
underwriter of the Company's initial public offering in 1997, 69,888 shares of
common stock held by RP&C International, Ltd. and 183,108 shares of common stock
underlying redeemable and non-redeemable warrants held by RP&C International and
Rauscher, Pierce & Resfnes. The common stock may be offered by its holders or
their successors in interest from time to time in transactions on the Nasdaq
SmallCap Market ("Nasdaq") or in privately negotiated transactions at current
market prices or at negotiated prices. The Company will not receive the proceeds
of sales of the common stock by its holders, but has received and will receive
proceeds from the exercise of warrants, to the extent they are exercised. See
Warrants below.

In July 1999, stockholders of the Company approved a proposal to increase
the number of authorized shares of common stock of the Company from 30,000,000
shares to 40,000,000 shares.

STOCK OPTION PLANS

In April 1995, the Company adopted its 1995 Stock Plan (the 1995 Stock
Option Plan) under which 2,000,000 shares of the Company's common stock was
reserved for issuance to officers, key employees and consultants of the Company.
The objectives of the stock plan are to attract and retain qualified personnel
for positions of substantial responsibility and to provide additional incentives
to employees and consultants to promote the success of the Company's business.
Options granted under the plan may be incentive stock options or non-qualified
stock options. The plan is administered by the Board of Directors. The options
are granted at the discretion of the Board of Directors at an option price per
share not less than fair market value at the date of grant. In May 1998,
stockholders of the Company approved a proposal to increase the number of shares
available for issuance under the 1995 Stock Plan from 2,000,000 shares to
3,900,000 shares. In July 1999, shareholders approved a proposal to increase the
authorized shares for issuance under the 1995 Stock Plan from 3,900,000 to
4,900,000.

In April 1995, the Company also adopted the 1995 Director Option Plan under
which 250,000 shares of the Company's common stock are reserved for issuance to
outside directors of the Company. The objective of the director plan is to
attract and retain qualified personnel for service as outside directors of the
Company and to encourage their continued service to the Board. Only
non-qualified stock options may be granted. Grants under the plan are automatic
and nondiscretionary and are issued at an option price per share not less than
fair market value at the date of grant.

33
<PAGE> 34

VIEWCAST.COM, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

Following is a summary of stock option activity from December 31, 1997
through December 31, 1999:

<TABLE>
<CAPTION>
STOCK OPTIONS
-------------------------------------------------
WEIGHTED-
AVERAGE
NUMBER PRICE PER EXERCISE PRICE
OF SHARES SHARE PER SHARE
------------ ------------ --------------
<S> <C> <C> <C>
Outstanding at December 31, 1997 2,737,810 $ .04 -$5.84 $ 3.27

Granted 1,638,009 2.06 - 4.09 2.69
Exercised 66,817 .04 - 3.00 .56
Canceled/forfeited 654,999 2.06 - 5.84 3.58
------------
Outstanding at December 31, 1998 3,654,003 .10 - 5.84 3.00

Granted 1,002,516 2.77 - 9.00 6.23
Exercised 1,341,622 .10 - 5.84 2.66
Canceled/forfeited 552,984 1.77 - 7.14 3.27
------------

Outstanding at December 31, 1999 2,761,913 $1.77 -$9.00 $ 4.33
============
</TABLE>

The weighted-average grant-date fair value of options granted was $1.60 and
$4.96 for the years ended December 31, 1998 and 1999, respectively.

The following information applies to options outstanding at December 31,
1999:

<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
----------------------------------------------------------------------- ---------------------------------
WEIGHTED-AVERAGE
REMAINING WEIGHTED-AVERAGE EXERCISABLE AT WEIGHTED-AVERAGE
RANGE OF OUTSTANDING AT CONTRACTUAL EXERCISE DECEMBER 31, EXERCISE
EXERCISE PRICES DECEMBER 31, 1999 LIFE PRICE 1999 PRICE
--------------- ----------------- --------------- ---------------- -------------- ----------------
<S> <C> <C> <C> <C> <C>
$ 1.00 - 2.00 1,000 8.8 $ 1.76 233 $ 1.76
2.01 - 3.00 913,381 6.0 2.71 725,971 2.76
3.01 - 4.00 607,533 4.9 3.44 321,736 3.46
4.01 - 5.00 316,149 7.6 4.54 151,280 4.58
5.01 - 6.00 391,350 8.7 5.41 61,825 5.17
6.01 - 7.00 33,000 9.3 6.14 - -
7.01 - 8.00 454,000 9.7 7.10 4,998 7.14
8.01 - 9.00 45,500 9.3 8.83 - -
-------------- ------ ------ ---------- ------
2,761,913 7.0 $ 4.33 1,266,043 $ 3.29
</TABLE>

Statement of Financial Accounting Standards No. 123 (SFAS 123), Accounting
For Stock Based Compensation, requires the disclosure of pro forma net income
and earnings per share information computed as if the Company had accounted for
its employee stock options granted subsequent to December 31, 1994 under the
fair value method set forth in SFAS 123. The fair value for these options was
estimated at the date of grant using the Black-Scholes option pricing model with
the following weighted-average assumptions:

34
<PAGE> 35

VIEWCAST.COM, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

<TABLE>
<CAPTION>
1998 1999
-------- --------
<S> <C> <C>
Risk-free interest rate 5.35% 5.50%
Dividend yield 0% 0%
Volatility factor of the
market price of the
Company's common
stock 60% 91%
Expected life of the options
(years) 6.0 6.6
</TABLE>

The Black-Scholes option valuation model was developed for use in estimating
the fair value of traded options, which have no vesting restrictions and are
fully transferable. In addition, option valuation models require the input of
highly subjective assumptions. Because the Company's employee stock options have
characteristics significantly different from those of traded options, and
because changes in the subjective input assumptions can materially affect the
fair value estimated, in management's opinion, the existing models do not
necessarily provide a reliable single measure of the fair value of its employee
stock options. In addition, because SFAS 123 is applicable only to options
granted subsequent to December 31, 1994, the pro forma information presented
below is not necessarily indicative of the effects on reported net income in
future years.

For purposes of pro forma disclosures, the estimated fair value of the
options is amortized to expense over the options' vesting periods. Pro forma
information for the years ended December 31, 1998 and 1999 is as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------------------
1998 1999
-------------- --------------
<S> <C> <C>
Pro forma net loss $ (10,741,022) $ (10,480,394)
Pro forma net loss per share:
basic and diluted $ (1.15) $ (.80)
</TABLE>

EMPLOYEE STOCK PURCHASE PLAN

In May 1995, the Company established an Employee Stock Purchase Plan (ESPP)
to provide employees of the Company with an opportunity to purchase common stock
through payroll deductions. Under the ESPP, 250,000 shares of common stock have
been reserved for issuance, subject to certain antidilution adjustments. The
ESPP is intended to qualify as an employee stock purchase plan within the
meaning of Section 423 of the Internal Revenue Code.

Each offering is for a period of six months ending April 30 and November 30.
The ESPP terminates in April, 2005. Eligible employees may participate in the
ESPP by authorizing payroll deductions during an offering period within a
percentage range determined by the Board of Directors. Initially, the amount of
authorized payroll deductions is not more than ten percent of an employee's cash
compensation during an offering period, but not more than $25,000 per year.
Amounts withheld from payroll are applied at the end of each offering period to
purchase shares of common stock. Participants may withdraw their contributions
at any time before stock is purchased, and in the event of withdrawal such
contributions will be returned to participants. The purchase price of the common
stock is equal to eighty-five percent (85%) of the lower of (i) the market price
of common stock immediately before the beginning of the applicable offering
period or (ii) the market price of common stock at the end of each offering
period. The Company pays all expenses incurred in connection with the
implementation and administration of the ESPP.

<PAGE> 36
VIEWCAST.COM, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

WARRANTS

The Company has issued private warrants to purchase common stock of the
Company in connection with the issuance and repayment of certain notes payable,
as inducement for early exercise of private warrants and as compensation for
services rendered by various consultants. Additionally, the Company has issued
public warrants to purchase common stock of the Company in connection with its
initial public offering and concurrent debt retirement and debt for equity
exchange (as described in the Common Stock section of Note 10).

The following is a summary of warrant activity from December 31, 1997
through December 31, 1999:

<TABLE>
<CAPTION>
WARRANTS
-------------------------------------------------------
WEIGHTED-
AVERAGE
NUMBER OF PRICE PER EXERCISE PRICE
SHARES SHARE PER SHARE
-------------- -------------- ---------------
<S> <C> <C> <C>
Outstanding and exercisable
at December 31, 1997 5,271,991 $ 1.00 -$4.63 $ 3.76

Granted - non-public warrants 1,796,664 3.00 - 4.50 4.02
Exercised 976,557 1.00 - 3.00 2.30
Canceled 23,442 1.00 - 4.50 3.49
--------------
Outstanding at December 31, 1998 6,068,656 1.00 - 4.50 3.91

Granted - non-public warrants 40,000 3.63 3.63
Exercised 525,791 3.00 - 4.19 3.55
Canceled -- -- --
--------------

Outstanding and exercisable
at December 31, 1999 5,582,865 $ 3.00 -$4.50 $ 3.93
==============
</TABLE>

In addition, at December 31, 1999 the Company's IPO representative and
assigns held warrants to purchase 140,000 units at $6.44 per unit, each unit
consisting of one share of common stock and one common stock purchase warrant
exercisable at $4.19 per share through February 2002.

At December 31, 1999, the Company had outstanding 2,609,817 redeemable
common stock public warrants that were issued in connection with the Company's
initial public offering, as well as 1,466,664 redeemable private warrants, with
terms similar to the public warrants, that were issued in connection with the
early exercise of private warrants during 1998. When initially issued, each
redeemable warrant entitled the holder to purchase 1.0 share of common stock at
$4.50, subject to adjustment under certain circumstances. In October 1998, the
Company reduced the effective exercise price of its then redeemable warrants
from $4.50 to $4.19 per share of common stock in accordance with the provisions
of its warrant agreements, whereby each redeemable warrant currently entitles
the holder to purchase 1.074 shares for $4.50. Both the public and private
redeemable warrants expire February 4, 2002 and are redeemable by the Company,
upon notice of not less than thirty days, at a price of $.10 per warrant,
provided that the closing price or bid price of the common stock for any twenty
trading days within a period of thirty consecutive trading days ending on the
fifth day prior to the day on which the Company gives notice of redemption has
been at least $6.75 (subject to adjustment under certain circumstances).

At December 31, 1999, the Company also had outstanding 1,506,384
non-redeemable private warrants with exercise prices ranging from $3.00 to $4.50
per share and with varying expiration dates through December 2002.

36
<PAGE> 37
VIEWCAST.COM, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

During February 1999, the Company issued 40,000 three-year warrants to
purchase Company common stock at $3.625 per share for services rendered in
connection with its Series B convertible preferred stock offering (see Note 10 -
Preferred Stock).

11. EMPLOYEE BENEFIT PLAN

Effective March 1, 1997, the Company adopted a profit sharing plan pursuant
to Section 401(k) of the Internal Revenue Code whereby participants may elect to
contribute up to twenty percent (20%) of their compensation subject to statutory
limitations. The plan provides for discretionary matching and profit sharing
contributions by the Company. All full-time employees are eligible to
participate in the plan provided they meet a minimum service requirement of six
consecutive months and a minimum age requirement of twenty-one. For the years
ended December 31, 1998 and 1999, the Company made no matching or profit sharing
contributions.

12. COMMITMENTS AND CONTINGENCIES

The Company leases various office and manufacturing space under
non-cancelable operating leases extending through 2003. The Company also leases
certain office and computer equipment under non-cancelable operating leases.
Future minimum operating lease payments with initial or remaining terms of one
year or more are as follows:

<TABLE>
<CAPTION>
OPERATING
LEASES
---------
<S> <C>
Year ended December 31:
2000 $ 446,561
2001 156,805
2002 140,954
2003 12,714
---------
Total minimum lease payments $ 757,034
=========
</TABLE>

Rent expense was $545,174 and $595,169 for the years ended December 31, 1998
and 1999, respectively.

In September, 1999 the Company entered into an employment contract with its
newly appointed Chief Executive Officer for an initial term of 18 months that
provides for a minimum annual salary and incentives based generally on the
Company's performance.

13. RELATED PARTY TRANSACTIONS

During 1998 and 1999, the Company paid consulting fees to its Chairman and
acting Chief Executive Officer of the Company in the amount of $48,000 and
$147,000, respectively until his resignation in September of 1999.

In June and July of 1998, the Company received $1,849,998 in gross proceeds
from the exercise of 616,666 warrants to purchase Company common stock at $3.00
per share from three principal shareholders. As an incentive for early exercise,
shareholders were issued 1,233,332 warrants to purchase Company stock at $4.50
per share. The warrants will expire in February 2002 and have exercise price
adjustment terms identical to the public warrants issued in connection with
Company's initial public offering.

37
<PAGE> 38
VIEWCAST.COM, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

In November 1998, the Company entered into a working capital line of credit
facility for up to $9 million with one its principal shareholders and now
Chairman of the Board of the Company. This one year, renewable facility, bears
interest at 12% per annum and is secured by all assets of the Company (See Note
6).

In December 1998 through February 1999, the Company received $9.45 million
in gross proceeds from the sale of 945,000 shares of a newly created Series B
convertible preferred stock at $10 per share. Two principal shareholders of the
Company purchased $4,000,000 each and other existing shareholders purchased the
balance of $1.45 million. The Series B preferred stock is convertible into
common stock of the Company at a fixed price of $3.625 per share, subject to
certain requirements, and carries a dividend of 8% per year payable in cash or
common stock of the Company, at the Company's option.

During 1999, the Company received $2,129,207 proceeds from the exercise of
802,549 stock options by officers and directors of the Company at exercise
prices ranging from $.20 to $4.03 per share.

14. SUBSEQUENT EVENTS

During January 2000 through February 18, 2000, the Company received
$1,863,828 proceeds from the exercise 621,276 warrants to purchase Company
common stock at $3.00 per share.

ITEM 8. CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

There have been no disagreements concerning any matter of accounting
principle or financial statement disclosure between the Company and its
independent auditors.

38
<PAGE> 39

PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS: COMPLIANCE
WITH SECTION 16(a) OF THE EXCHANGE ACT.

DIRECTORS

The names of the nominees for Director and certain other information
about them are set forth below:

<TABLE>
<CAPTION>
NOMINEE AGE DIRECTOR SINCE OFFICE HELD WITH COMPANY
------- --- -------------- ------------------------

<S> <C> <C> <C>
H. T. Ardinger 74 1999 Chairman of the Board

Joseph Autem 42 1999 Director

George C. Platt 59 1999 Director, President and Chief Executive
Officer

David A. Dean 52 1999 Director
</TABLE>

H.T. ARDINGER has served as a Director and Chairman of the Board since
April 1999. Mr. Ardinger co-founded H.T. Ardinger & Son Co., a specialty import
wholesaler, where he has served as Chairman of the Board and Chief Executive
Officer since 1964. Mr. Ardinger served as a Director and Executive Committee
Member of Home Interiors & Gifts, Dallas, Texas, from 1958 through 1998 and was
a founding Limited Partner of the Dallas Maverick's National Basketball
Association Franchise in 1980. Mr. Ardinger received a B.B.A. degree in Business
Administration from Southern Methodist University.

JOSEPH AUTEM has served as a Director since January 1999 and was previously
a Director of Broadcast.com, Inc. beginning in September 1996. Mr. Autem has
served in various consulting capacities from July 1998 to the present. Mr. Autem
previously served as Senior Vice President and Chief Financial Officer of CS
Wireless, Inc., a privately held company that provides wireless video and high
speed internet access, from June to July 1998. Mr. Autem also served as a
partner of Vision Technology Partners, a private investment company, from March
1997 to June 1998. From July 1996 to December 1996, Mr. Autem served as Chief
Financial Officer of Broadcast.com, Inc. From 1992 to 1996, Mr. Autem served as
Vice President of Finance, Secretary, Treasurer and Chief Financial Officer of
OpenConnect Systems, Inc., a software company. Mr. Autem became a certified
public accountant in 1987 and holds a B.S. in Accounting from Pittsburgh State
University.

DAVID A. DEAN has been a Director since December 1999. He is Chairman and
Chief Executive Officer of Dean International, Inc., an international public
policy consulting agency founded in 1994 and of its subsidiary, Innovative
Transportation Strategies. Mr. Dean has been the principal shareholder since
1994 of David A. Dean & Associates, P.C., a public policy administrative
regulatory law firm. From 1983 to 1994, Mr. Dean was a shareholder of a
Dallas-based law firm, Winstead, Sechrist & Minick, P.C., and served as a member
of the firm's Board of Directors, head of the Public Law Section, Chairman of
the Business Development Committee, a member of the firm's Advisory Board and
Chairman of the firm's PAC Committee. He was also President of Transportation
Strategies, Inc., a subsidiary of the firm's consulting group. During 1972 to
1993, Mr. Dean served the State of Texas in several roles. He was General
Counsel to both republican Governor William P. Clements, Jr. and his
predecessor, democratic Governor Dolph Briscoe and served as Texas Secretary of
State under Governor Clements. Mr. Dean was active in the gubernatorial
campaigns for Governor Briscoe and Governor Clements. Mr. Dean received his
B.B.A. degree from Southern Methodist University and his Juris Doctor degree
from University of Texas at Austin.

39
<PAGE> 40

GEORGE PLATT has served as Chief Executive Officer and President since
September 1999. From 1991 through 1999, Mr. Platt was employed by Intecom, Inc.,
a Dallas-based provider of multimedia telecommunications products and services.
He initially was the CEO of Intecom, Inc., and later also became the President.
Prior to his employment with Intecom, Inc., Mr. Platt was an executive with SRX,
an entrepreneurial startup company. Before that, he was a Group Vice President
at Rolm Corporation through its acquisition by IBM, and prior to that, he was
employed by Xerox for fifteen years, where he attained the position of General
Manager. Mr. Platt holds an M.B.A. from the University of Chicago and a B.S.
degree from Northwestern University.

EXECUTIVE OFFICERS

The following table contains information as of April 26, 2000 as to the
executive officers of ViewCast.

<TABLE>
<CAPTION>
NAME AGE OFFICE HELD WITH COMPANY
---- --- ------------------------

<S> <C> <C>
George C. Platt 59 Chief Executive Officer and President
Laurie L. Latham 43 Chief Financial Officer and Senior Vice President of
Finance and Administration
Harry E. Bruner 53 Senior Vice President of Sales and Marketing
David T. Stoner 43 Vice President of Operations
Neal S. Page 41 Vice President of Osprey Products
</TABLE>

MR. PLATT'S information can be found with the above information concerning
nominees for director.

LAURIE L. LATHAM has served as Chief Financial Officer and Senior Vice
President of Finance and Administration of ViewCast since December 1999. From
1997 until she joined ViewCast, Ms. Latham served as Senior Vice President and
Chief Financial Officer of Perivox Corporation, an interactive communications
and direct marketing company. From 1994 through 1997, she was the Vice President
of Finance and Administration at Axis Media Corporation. Prior to joining Axis
Media Corporation, Ms. Latham was a practicing Certified Public Accountant for
several accounting firms, including KPMG Peat Marwick, and was a Vice President
of Finance and Administration for Medialink International Corporation. Ms.
Latham received her B.B.A. from the University of Texas with an emphasis in
Accounting and is a Certified Public Accountant.

HARRY E. BRUNER began serving as Senior Vice President of Sales and
Marketing in February 2000. From 1997 until he joined ViewCast, he was the Vice
President of Worldwide Sales for Intecom, Inc., a Dallas-based provider of
multimedia telecommunications products and services. From 1994 through 1997, he
was the President of the Call Center Division of Executone Information Systems,
Inc. From 1991 through 1993, Mr. Bruner was the Vice President of Sales for
Digital Sound Corporation. From 1989 through 1991, he was Vice President of
Sales for North America for Aspect Telecommunications. From 1987 through 1989,
he was Director of Sales for Octel Communications. Prior to 1987, Mr. Bruner
served in a variety of management positions with Rolm Corporation, including
after it was acquired by IBM in 1985. Mr. Bruner earned his B.A. from Loyola
College in Baltimore, Maryland.

MR. STONER joined ViewCast as Vice President of Operations in August 1996.
From August 1994 to August 1996, Mr. Stoner was Vice President of Engineering
for the Connectworks Division of Connectware, Inc., a wholly owned subsidiary of
AMP Inc. From July 1986 to August 1994, Mr. Stoner was employed by Visual
Information Technologies, Inc. ("VITec"), a manufacturer of video, imaging, and
graphics products, which was purchased by Connectware, Inc. At VITec, Mr. Stoner
was responsible for the development of hardware and software products, and
served in various positions including Vice President of Engineering. From
January 1979 to July 1986, Mr. Stoner served in various engineering positions at
Texas Instruments, Inc. Mr. Stoner received his B.S. degree in Electrical
Engineering from the University of Kansas.

40
<PAGE> 41

MR. PAGE has been Vice President of Osprey Products for ViewCast since
January 1995. From October 1994 to December 1994, Mr. Page served as Director of
Product Development of ViewCast. From April 1988 to September 1994, Mr. Page was
employed by Sun Microsystems, Inc., where he held management positions directing
development and strategic relationships for multimedia technology products. Mr.
Page developed advanced graphics and imaging products at General Electric from
1984 to 1988 and at Data General from 1983 to 1984. Mr. Page holds B.S. and M.S.
degrees in Electrical and Computer Engineering from North Carolina State
University.

There are no family relationships among the directors, executive officers,
or other significant employees of ViewCast.

COMPLIANCE WITH SECTION 16(a) OF THE
SECURITIES EXCHANGE ACT OF 1934

Section 16(a) of the Exchange Act requires ViewCast's officers, directors
and persons who beneficially own more than 10% of a registered class of
ViewCast's equity securities to file reports of ownership and changes in
ownership with the Securities and Exchange Commission. Officers, directors and
greater than 10% shareholders are required by the regulation to furnish ViewCast
with copies of the Section 16(a) forms which they file.

To ViewCast's knowledge, based solely on review of the copies of such
reports furnished to ViewCast, and written representations that no other reports
were required during the year ended December 31, 1999, all Section 16(a) filing
requirements applicable to ViewCast's officers, directors and greater than ten
percent (10%) beneficial owners were complied with, with the exception of Glenn
A. Norem and H. T. Ardinger, Jr., Directors of ViewCast, who each failed to
timely file a Form 5. Mr. Norem is now current in his Section 16(a) filings.
ViewCast is currently working with Mr. Ardinger to comply with the requirements
of Section 16(a).

ITEM 10. EXECUTIVE COMPENSATION

DIRECTOR COMPENSATION

Directors currently receive no cash compensation for serving on the
Board of Directors other than reimbursement of reasonable expenses incurred in
attending meetings. In May 1995, ViewCast adopted a 1995 Director Option Plan
(the "Director Plan") under which only outside directors are eligible to receive
stock options. The Director Plan provides for the grant of nonstatutory stock
options to directors who are not employees of ViewCast. A total of 250,000
shares of Common Stock have been authorized for issuance under the Director
Plan. As of March 31, 2000, options to purchase an aggregate of 65,000 shares at
exercise prices ranging from $3.125 to $9.000 per share had been granted and are
outstanding under the Director Plan and options to purchase an aggregate of
48,016 shares have been previously granted and exercised. Each non-employee
director who joins the Board after May 1, 1995 will automatically be granted a
nonstatutory option to purchase 15,000 shares of Common Stock on the date upon
which such person first becomes a director. In addition, each such non-employee
director will automatically be granted a nonstatutory option to purchase 10,000
shares of Common Stock upon annual re-election to the Board, provided the
director has been a member of the Board for at least six months upon the date of
re-election. The exercise price of each option granted under the Director Plan
is equal to the fair market value of the Common Stock on the date of grant. Each
initial 15,000 share grant vests at the rate of 25% of the option shares upon
the first anniversary of the date of grant and one forty-eighth of the options
shares per month thereafter, and each annual 10,000 share grant vests at the
rate of 25% of the option shares upon the first anniversary of the date of grant
and one forty-eighth of the options shares per month thereafter, in each case
unless terminated sooner upon termination of the optionee's status as a director
or otherwise pursuant to the Director Plan. In the event of a merger of ViewCast
with or into another corporation or a consolidation,

41
<PAGE> 42

acquisition of assets or other change in control transaction involving ViewCast,
each option becomes exercisable unless assumed or an equivalent option
substituted by the successor corporation. Unless terminated sooner, the Director
Plan will terminate in 2005. The Director Plan is currently administered by the
Board of Directors. The Board has authority to amend or terminate the Director
Plan, provided that no such action may impair the rights of any optionee without
the optionee's consent.

In April 1999, Mr. Ardinger was granted an option to purchase 15,000 shares
of Common Stock under the 1995 Director Plan, at an exercise price of $9.00
per share. The option vests over a four-year period.

In July 1999, Mr. Autem was granted an option to purchase 10,000 shares of
Common Stock under the 1995 Director Plan, at an exercise price of $7.1405 per
share. The option vests over a four-year period. In January 1999, Mr. Autem was
granted an option to purchase 15,000 shares of Common Stock under the 1995
Director Plan, at an exercise price of $3.125 per share. The option vests over a
four-year period. In January 1999, Mr. Autem was granted an option to purchase
40,000 shares of Common Stock under the 1995 Option Plan, at an exercise price
of $3.625 per share. The option vests over a four-year period.

In November 1999, Mr. Dean was granted an option to purchase 15,000 shares
of Common Stock under the 1995 Director Plan, at an exercise price of $4.5315
per share. The option vests over a four-year period.

42
<PAGE> 43
SUMMARY COMPENSATION TABLE

The following table sets forth information concerning compensation paid by
ViewCast to the Chief Executive Officer and to all other executive officers of
ViewCast whose total salary and bonus exceeded $100,000 for the year ended
December 31, 1999.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG TERM
ANNUAL ANNUAL COMPENSATION
COMPENSATION COMPENSATION OPTIONS
PRINCIPAL POSITION FISCAL YEAR SALARY BONUS (IN SHARES)
------------------ ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
George C. Platt 1999 $240,000(1) $ -- 400,000
Chief Executive Officer
And President

William D. Jobe 1999 147,000(2) -- --
Chief Executive Officer
And President

Glenn A. Norem (3) 1999 175,000 -- --
Chief Executive Officer 1998 182,292 -- 50,000
1997 161,042 -- 160,000

Laurie L. Latham 1999 150,000(4) -- 100,000
Chief Financial Officer

William S. Leftwich (5) 1999 120,000(5) -- --
Chief Financial Officer 1998 120,000 -- 10,000
1997 120,000 -- 20,000

Neal S. Page 1999 119,994 -- 15,000
Vice President of 1998 114,990 25,783 35,000
Osprey Products 1997 112,490 10,000 20,000

David T. Stoner 1999 120,000 20,146 15,000
Vice President of 1998 120,000 -- 5,000
Operations 1997 120,000 -- --
</TABLE>

43
<PAGE> 44
(1) Represents Mr. Platt's annual salary. He assumed his duties with ViewCast
in September 1999 and earned $70,000 in salary in 1999.

(2) Represents Mr. Jobe's consulting fees. He assumed his duties as acting
Chief Executive Officer and President with ViewCast in February 1999 under
a consulting arrangement and continued until July 12, 1999.

(3) Mr. Norem resigned from his employment with ViewCast in January 1999 and
continued after that date as a Director with the company.

(4) Represents Ms. Latham's annual salary. She assumed her duties with ViewCast
on December 9, 1999 and earned $9,135 in salary in 1999.

(5) Mr. Leftwich resigned from his employment with ViewCast in May 1999 and
earned $45,000 in salary in 1999.

The following table provides information concerning options granted to the
executive officers of ViewCast in 1999.

OPTION GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
% OF TOTAL
OPTIONS GRANTED EXERCISE OR
OPTIONS TO EMPLOYEES IN BASE EXPIRATION
NAME GRANTED FISCAL YEAR PRICE/SHARE DATE
---- ------- --------------- ----------- ----------
<S> <C> <C> <C> <C>
George C. Platt ......... 400,000 44.0 $ 7.0940 9/17/09
William D. Jobe ......... -- -- -- --
Glenn A. Norem .......... -- -- -- --
Laurie L. Latham ........ 100,000 11.0 5.5005 12/21/09
William S. Leftwich ..... -- -- -- --
Neal S. Page ............ 15,000 1.6 5.5005 12/21/09
David T. Stoner ......... 15,000 1.6 5.5005 12/21/09
</TABLE>

YEAR-END OPTION VALUES

The following table sets forth certain information as of December 31, 1999
concerning the value of unexercised options held by the officers named in the
Summary Compensation Table above.

44
<PAGE> 45
FISCAL YEAR-END OPTION VALUES

<TABLE>
<CAPTION>
NUMBER OF SHARES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE MONEY OPTIONS
OPTIONS AT DECEMBER 31, 1999 AT DECEMBER 31, 1999(1)
---------------------------- ---------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
George C. Platt ......... -- 400,000 $ -- $ --
William D. Jobe ......... -- -- -- --
Glenn A. Norem .......... 227,766 10,000 192,776 --
Laurie L. Latham ........ -- 100,000 -- --
William S. Leftwich ..... 38,666 -- 38,445 --
Neal S. Page ............ 138,416 61,584 171,487 72,773
David T. Stoner ......... 67,917 52,803 21,541 17,704
</TABLE>

(1) Represents the difference between the exercise price of the outstanding
options and the fair market value of the Common Stock on December 31, 1999
of $4.2815 per share.

EMPLOYMENT AGREEMENTS

We have entered into an employment agreement with Mr. Platt. His employment
agreement is in effect through March 2001 with automatic one-year renewals
unless ViewCast or Mr. Platt elects in advance not to renew the agreement. The
employment agreement provides (i) for annual base compensation of $240,000; (ii)
that he is eligible to receive bonuses if our Board of Directors so elects;
(iii) for stock options to purchase 400,000 shares of our Common Stock pursuant
to the 1995 Stock Plan; and (iv) for an eighteen (18) month non-compete period
if Mr. Platt is terminated by ViewCast.

ViewCast entered into a five-year employment agreement with Glenn A. Norem,
effective February 7, 1994, which provided for his employment as Chief Executive
Officer. This agreement was terminated effective February 6, 1999, upon his
resignation from ViewCast. A separation agreement, dated January 15, 1999
provided for a continuation of Mr. Norem's annual base compensation of $175,000
through June 30, 1999, the payment to Mr. Norem of all notes, interest, expenses
and accrued compensation ($90,082) within seven days of the date of the
agreement, the vesting of all stock options owned by Mr. Norem and the removal
of all restrictive legends from all Company securities owned by Mr. Norem to the
extent permitted by applicable Federal and State securities laws. The agreement
also includes a non-compete, non-solicitation and non-circumvention agreement
with ViewCast until June 30, 1999. Mr. Norem also agreed to stand for
re-election to ViewCast's Board of Directors. In addition, Mr. Norem agreed to
provide consulting services to ViewCast at least through October 15, 1999.

The employment of all other officers with ViewCast is "at will" and may be
terminated by ViewCast or the officer at any time, for any reason or no reason.

The employment of former officer Mr. Colquhoun was terminated effective
December 1, 1998 upon his resignation from ViewCast. A separation agreement
dated December 15, 1998 provided for continuation of Mr. Colquhoun's annual base
compensation of $150,000 through May 31, 1999. In addition, Mr. Colquhoun agreed
to provide consulting services to ViewCast for a period of twelve months. The
employment of former officer Mr. Vaughn was terminated effective December 2,
1998 upon his resignation, and he received compensation of $25,611 during 1999.
The employment of former officer Mr. Leftwich was terminated effective May 14,
1999, upon his resignation from ViewCast.

45
<PAGE> 46
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

BENEFICIAL OWNERSHIP OF COMMON STOCK

The following table sets forth information as of February 29, 2000, based on
information obtained from public records and our books and records regarding the
persons named below, with respect to the beneficial ownership of shares of our
Common Stock by (i) each person or a group known by us to be the owner of more
than five percent (5%) of the outstanding shares of our Common Stock, (ii) each
director, (iii) each executive officer and (iv) all officers and directors as a
group.

<TABLE>
<CAPTION>
PERCENTAGE OF
NAME AND ADDRESS AMOUNT AND NATURE OF OUTSTANDING SHARES
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP OWNED (1),(2)
------------------- -------------------- ------------------

<S> <C> <C>
H.T. ARDINGER, JR............. 2,870,299 (3) 14.9
9040 Governors Row
Dallas, TX 75247

ESTATE OF FRED KASSNER........ 1,284,730 (4) 6.7
69 Spring Street
Ramsey, NJ 07446

M. DOUGLAS ADKINS............. 1,229,769 (5) 6.4
1601 Elm Street
Dallas, TX 75021

ROBERT MOODY, JR.............. 972,251 (6) 5.0
601 Moody National Bank Bldg.
Galveston, TX 77550

GLENN A. NOREM................ 946,455 (7) 4.9
5550 LBJ Freeway, Suite 300
Dallas, TX 75240

GEORGE C. PLATT............... 2,500 *
2665 Villa Creek Drive, Suite 200
Dallas, TX 75234

LAURIE L. LATHAM.............. -- *
2665 Villa Creek Drive, Suite 200
Dallas, TX 75234

NEAL S. PAGE.................. 147,612 (8) *
2665 Villa Creek Drive, Suite 200
Dallas, TX 75234

DAVID T. STONER............... 77,458 (9) *
2665 Villa Creek Drive, Suite 200
Dallas, TX 75234

JOSEPH AUTEM.................. 17,186 (10) *
2665 Villa Creek Drive, Suite 200
Dallas, TX 75234

DAVID DEAN.................... -- *
8080 Park Lane, Suite 600
Dallas, TX 75231

All executive officers and.... 4,061,510 (3),(7),(8),(9),(10) 21.0
directors as a group
(eight (8) persons)
</TABLE>

- --------------------------------------------------------------------------------
* Less than one percent (1%)

46
<PAGE> 47

(1) A person is deemed to be the beneficial owner of securities that can be
acquired by such person within 60 days from February 29, 2000 upon the
exercise of warrants or options. Each beneficial owner's percentage
ownership is determined by assuming that options or warrants that are held
by such person (but not those held by any other person) and which are
exercisable within 60 days from February 29, 2000 have been exercised.
Unless otherwise indicated, we believe that all persons named in the table
have sole voting and investment power with respect to all shares of Common
Stock beneficially owned by them.

(2) Based on a total of 15,205,607 shares issued and outstanding plus, for each
person listed, any Common Stock that person has the right to acquire as of
April 30, 2000 pursuant to options, warrants, conversion privileges, etc.

(3) Includes (i) 134,334 shares owned by Mr. Ardinger's wife, (ii) 22,000
shares of Common Stock reserved for issuance upon the exercise of
outstanding warrants at $4.50 per share, (iii) 720,000 shares of Common
Stock reserved for issuance upon the exercise of outstanding warrants at
$4.19 per share and (iv) 1,103,448 shares of Common Stock reserved for
issuance upon the conversion of $4,000,000 of Series B Convertible
Preferred Stock to Common Stock at $3.625 per share and (v) 3,750 shares
issuable at $9.00 per share issued under the 1995 Directors Option Plan.

(4) Includes (i) 486,666 shares of Common Stock reserved for issuance upon the
exercise of outstanding warrants at $4.19 per share, (ii) 56,667 shares of
Common Stock reserved for issuance upon the exercise of outstanding
warrants to purchase Common Stock at $3.00 per share and (iii) 50,000
shares of Common Stock reserved for issuance upon the exercise of
outstanding warrants to purchase Common Stock at $4.50 per share.

(5) Includes (i) 10,000 shares of Common Stock reserved for issuance upon the
exercise of outstanding warrants at $4.50 per share, (ii) 226,666 shares of
Common Stock reserved for issuance upon the exercise of outstanding
warrants at $4.19 per share and (iii) 551,724 shares of Common Stock
reserved for issuance upon the conversion of $2,000,000 of Series B
Convertible Preferred Stock to Common Stock at $3.625 per share.

(6) Includes 250,000 shares beneficially owned by Moody Insurance Group, Inc.,
of which Mr. Moody is Chairman, President and the sole stockholder.

(7) Includes (i) 160,000 shares issuable at $3.30 per share upon exercise of
options issued under the 1995 Option Plan, (ii) 50,000 shares issuable at
$5.0875 per share upon exercise of options issued under the 1995 Option
Plan, (iii) 17,766 shares of Common Stock reserved for issuance upon the
exercise of outstanding options at $2.27 per share and (iv) 13,200 shares
owned by Mr. Norem's children.

(8) Includes (i) 80,000 shares issuable at $3.00 per share upon the exercise of
options issued under the 1994 Option Plan and (ii) 42,000 shares issuable
at $3.00 per share upon the exercise of options issued under the 1995
Option Plan, (iii) 12,333 shares issuable at $4.625 per share upon the
exercise of options issued under the 1995 Option Plan and (iv) 11,083
shares issuable at $2.0625 upon exercise of options issued under the 1995
Option Plan.

(9) Includes (i) 73,334 shares of issuable at $4.00 per share upon exercise of
options granted under the 1995 Option Plan and (ii) 1,583 shares issuable
at $2.0625 upon exercise of options issued under the 1995 Option Plan.

(10) Includes (i) 4,687 shares issuable at $3.1250 per share upon the exercise
of options issued under the 1995 Directors Option Plan and (ii) 12,499
shares issuable at $3.6250 per share upon the exercise of options issued
under the 1995 Option Plan.

47
<PAGE> 48

ITEM 12. CERTAIN RELATIONSHIP AND RELATED TRANSACTIONS

During 1998 and 1999, the Company paid consulting fees of $48,000 and
$147,000, respectively to William D. Jobe, its Chairman and acting Chief
Executive Officer of the Company.

During 1998 and 1999, the Company repaid to Glenn A. Norem, director
and former Chief Executive Officer of the Company, $311,243 principal balance of
15% secured and demand notes together with interest totaling $34,160.

In October 1998, the Company entered into a working capital line of credit
facility for up to $9 million with an entity controlled by one of its principal
shareholders, H.T. Ardinger, Jr. Mr. Ardinger has also served as Chairman of the
Board of the Company since April of 1999. This one year, renewable facility,
which contains terms more favorable than the Company's prior facility, bears
interest at 12% per annum and is secured by all assets of the Company. The
availability of funds under this facility is subject to certain borrowing base
limitations based principally on qualifying accounts receivable and inventory. A
portion of the proceeds from this facility was used to retire the Texas
commercial bank line of credit. As an incentive to advance the line of credit,
Mr. Ardinger was issued 200,000 three-year warrants to purchase Company stock at
$4.50 per share. The value of the warrants of $1.33 per share, as determined
using the Black-Scholes option valuation model, is being charged to interest
expense over the term of the note. During 1999, the Company paid interest of
$389,943 and repaid principal of $1,278,686 on the credit facility.

In December 1998 through February 1999, the Company received $9.45
million in gross proceeds from the sale of 945,000 shares of a newly created
Series B convertible preferred stock at $10 per share. H.T. Ardinger, Jr. and
entities controlled by M. Douglas Adkins, both principal shareholders of the
Company, purchased $4,000,000 each of the Series B preferred issue. The Series B
preferred stock is convertible into common stock of the Company at a fixed price
of $3.625 per share, subject to certain requirements, and carries a dividend of
8% per year payable in cash or common stock of the Company, at the Company's
option.

During 1999, the Company received $2,129,207 proceeds from the exercise
of 802,549 stock options by officers and directors of the Company at exercise
prices ranging from $.20 to $4.03 per share. Following is a list of the officers
and directors who exercised options during the year:

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
GROSS
PROCEEDS TO PER SHARE
SHARES THE EXERCISE PRICE
NAME TITLE EXERCISED COMPANY RANGE
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Glenn A. Norem Director 472,234 $1,091,471 $2.27 - $2.42
- ---------------------------------------------------------------------------------------------------------
William D. Jobe Former Director 266,149 842,582 0.20 - 4.03
- ---------------------------------------------------------------------------------------------------------
William S. Leftwich Former Chief Financial Officer 50,000 150,000 3.00
- ---------------------------------------------------------------------------------------------------------
William E. Johnson Former Director 14,166 45,154 3.19
- ---------------------------------------------------------------------------------------------------------
</TABLE>

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

a.) Exhibits

See Exhibit index.

b.) Reports on Form 8-K

No reports were filed on Form 8-K during the fourth quarter of 1999.

48
<PAGE> 49

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

Date ViewCast.com, Inc.
----

May 1, 2000 By: /s/ Laurie L. Latham
--------------------
Laurie L. Latham
Chief Financial Officer and Senior Vice
President of Finance and Administration

In accordance with the Exchange Act, this report has been signed below by
the following persons on behalf of the registrant and in the capacities and on
the dates indicated.

Date ViewCast.Com, Inc.
----

May 1, 2000 By: /s/ H.T. Ardinger, Jr.
----------------------
H.T. Ardinger, Jr.
Director and Chairman of the Board

May 1, 2000 By: /s/ George C. Platt
-------------------
George C. Platt
Director, President and Chief Executive
Officer

May 1, 2000 By: /s/ Laurie L. Latham
--------------------
Laurie L. Latham
Chief Financial Officer and Senior Vice
President of Finance and Administration

May 1, 2000 By: /s/ Joseph W. Autem
-------------------
Joseph W. Autem
Director

May 1, 2000 By: /s/ David A. Dean
-----------------
David A. Dean
Director

49
<PAGE> 50

<TABLE>
<CAPTION>
EXHIBIT INDEX

EXHIBIT DESCRIPTION OF EXHIBIT SEQUENTIAL
PAGE PAGE
NO. NO.
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
2 Agreement and Plan of Merger and Reorganization (1)

3(a) Certificate of Incorporation (1)

3(b) Amendment to Certificate of Incorporation (1)

3(c) Restated By-Laws (3)

3(d) Certificate of Designations of Series B Convertible Preferred Stock (4)

4(a) Form of Common Stock Certificate (1)

4(b) Form of Warrant Certificate (1)

4(c) Form of Warrant Agreement between ViewCast and Continental Stock Transfer &

Trust Company (1)

4(d) Form of Representative's Warrant Agreement (1)

4(e) Form of Trust Indenture - $5,000,000 8% Senior Convertible Notes Due 2002 (2)

4(f) Form of Lead Managers Warrant Agreement (2)

9(a) Voting Trust Agreement between Robert M. Sterling, Jr. and Thomas E. Brown (1)

9(b) Voting Trust Agreement between Robert P. Bernardi and Richard Bernardi (1)

9(c) Form of Lock-Up Agreement (1)

9(d) Lock-Up Agreement with Robert Sterling Trust (1)

9(e) Lock-Up Agreement with Robert Bernardi Trust (1)

9(f) Lock-Up Agreement with Michael Nissenbaum (1)

10(a) Modified Employment Agreement between ViewCast and Glenn A. Norem (1)

10(b) Modified Consulting Agreement between ViewCast and Sterling Capital Group Inc. (1)

10(c) Form of Indemnification Agreement between ViewCast and Executive Officers and Directors (1)

10(d) 1995 Stock Option Plan (1)

10(e) 1994 Stock Option Plan (1)

10(f) 1993 Viewpoint Stock Plan (1)

l0(g) 1995 Director Option Plan (1)

10(h) Lease Agreement between ViewCast and Metro Squared, L P (1)
</TABLE>

<PAGE> 51

<TABLE>
<S> <C> <C>
10(i) Employee Stock Purchase Plan (1)

l0(j) Licensing Agreement between ViewCast and Boca Research, Inc. (1)

10(k) Agreement between ViewCast and Unisys? (1)

10(l) Employment Agreement between ViewCast and Philip M. Colquhoun (1)

10(m) Employment Agreement between ViewCast and William S. Leftwich (1)

10(n) Employment Agreement between ViewCast and David T. Stoner (1)

10(o) Employment Agreement between ViewCast and Neal Page (1)

10(p) Employment Agreement between ViewCast and A. David Boomstein (1)

10(r) Lease between ViewCast and Burlingame Home Office, Inc. (1)

10(s) Lease between ViewCast and Family Funds Partnership (1)

10(t) Agreement between ViewCast and Catalyst Financial Corporation (1)

10(u) Promissory Note by ViewCast payable to Robert Rubin dated September 5, 1996. (1)

10(v) Promissory Note by ViewCast payable to M. Douglas Adkins dated November 15, 1996. (1)

10(w) Promissory Note by ViewCast payable to H.T. Ardinger dated November 15, 1996. (1)

10(x) Promissory Note by ViewCast payable to H.T. Ardinger dated January 15, 1997. (1)

10(y) Promissory Note by ViewCast payable to Adkins Family Partnership, Ltd. dated January 15,
1997. (1)

10(z) Lease between ViewCast and the Air Force Association. (2)

10(aa) Lease between ViewCast and Airport Boulevard Partners, LLC. (2)

10(bb) Stock Purchase Agreement between ViewCast and Tadeo Holdings, Inc. (5)

10(cc) Working Capital Line of Credit Loan Agreement between ViewCast and the Ardinger Family
Partnership, Ltd. (5)

21 List of Subsidiaries of ViewCast. (1)

23 Consent of Ernst & Young LLP

27 Financial Data Schedule (Filed in electronic format only)
</TABLE>

(1) Incorporated by reference to the Registration Statement on Form SB-2
and all amendments thereto as declared effective on February 4, 1997.
(2) Incorporated by reference to Form 10-KSB/A filed April 15, 1998.
(3) Incorporated by reference to Form 10-QSB filed November 13, 1998
(4) Incorporated by reference to Form 8-K filed March 15, 1999.
(5) Incorporated by reference to Form 10-KSB filed March 26, 1999.

<PAGE> 1

Exhibit 23

CONSENT OF INDEPENDENT AUDITORS

We consent to the incorporation by reference in the Registration Statements
(Form SB-2 No. 333-31947, Form S-8 No. 333-53159, Form S-8 No. 333-63799 and
Form S-3 No. 333-77923) of ViewCast.com, Inc. and in the related Prospectuses of
our report dated February 18, 2000, with respect to the consolidated financial
statements of ViewCast.com, Inc. included in this Annual Report (Form 10-KSB)
for the year ended December 31, 1999.

ERNST & YOUNG LLP

Dallas, Texas
March 27, 2000

<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET OF VIEWCAST.COM, INC. AND SUBSIDIARIES AS OF DECEMBER
31, 1999 AND THE RELATED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEAR
ENDED, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> DEC-31-1999
<CASH> 4,315,980
<SECURITIES> 3,410,853
<RECEIVABLES> 1,503,395
<ALLOWANCES> 117,000
<INVENTORY> 2,526,096
<CURRENT-ASSETS> 11,732,922
<PP&E> 2,765,895
<DEPRECIATION> 1,427,752
<TOTAL-ASSETS> 13,565,382
<CURRENT-LIABILITIES> 4,157,768
<BONDS> 0
0
95
<COMMON> 1,463
<OTHER-SE> 9,406,056
<TOTAL-LIABILITY-AND-EQUITY> 13,565,382
<SALES> 7,104,080
<TOTAL-REVENUES> 7,270,080
<CGS> 3,948,377
<TOTAL-COSTS> 3,748,377
<OTHER-EXPENSES> 3,547,847
<LOSS-PROVISION> 145,966
<INTEREST-EXPENSE> 954,168
<INCOME-PRETAX> (8,473,674)
<INCOME-TAX> 0
<INCOME-CONTINUING> (8,473,674)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (8,473,674)
<EPS-BASIC> (0.71)
<EPS-DILUTED> (0.71)

</TABLE>