UNITED STATES
                SECURITIES AND EXCHANGE COMMISSION
                      Washington, D.C. 20549


                           FORM 10-QSB

[X]   Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
      Exchange Act of 1934.

           For the Quarterly Period ended June 30, 2004

[ ]   Transition Report Pursuant to Section 13 or 15(d) of the Securities
      Exchange Act of 1934.

     For the transitional period ________ to __________.


                 Commission File Number: 0-13316

                  BROADCAST INTERNATIONAL, INC.
 ----------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)

                  Utah                          87-0395567
       -----------------------        --------------------------------
      (State of Incorporation)        (IRS Employer Identification No.)

      7050 Union Park Ave. #600, Salt Lake City, Utah  84047
     -------------------------------------------------------
       (Address of Principal Executive Offices) (Zip Code)

                          (801) 562-2252
         -----------------------------------------------
         (Issuer's telephone number, including area code)

     Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 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. ( x ) Yes  (  ) No

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

           Class                      Outstanding as of August 15, 2004
           -----                      ---------------------------------
  Common Stock,.05 Par Value                19,624,701 shares

Transitional Small Business Disclosure Format: Yes [  ] No [ X ]


                                1
<PAGE>



                  Broadcast International, Inc.
                           Form 10-QSB

                        Table of Contents


Part I - Financial Information                                         Page

         Item 1.  Financial Statements                                  3

         Item 2.  Management's Discussion and Analysis or
                  Plan of Operation                                     9

         Item 3.  Controls and Procedures                               13

Part II - Other Information

         Item 1.  Legal Proceedings                                     14

         Item 2.  Changes in Securities and Small Business Issuer
                  Purchases of Equity Securities                        14

         Item 3.  Defaults Upon Senior Securities                       15

         Item 4.  Submission of Matters to a Vote of Security Holders   15

         Item 5.  Other Information                                     15

         Item 6.  Exhibits and Reports on Form 8-K                      16

Signatures                                                              16


                                2
<PAGE>

<PAGE>
Item 1. Financial Information

          BROADCAST INTERNATIONAL, INC. AND SUBSIDIARIES
               CONSOLIDATED CONDENSED BALANCE SHEET
                           (Unaudited)
                                                                  June 30,
ASSETS                                                             2004
------                                                          -------------

CURRENT ASSETS
  Cash and cash equivalents                                     $    254,296
  Trade receivable (net)                                             707,156
  Inventory                                                           27,836
  Prepaid expenses                                                   174,704
                                                                -------------
    Total Current Assets                                           1,163,992
                                                                -------------

NON-CURRENT ASSETS
  Equipment and leasehold improvements, net                          912,705
  Patents                                                            137,552
  Other assets                                                         7,824
                                                                -------------
TOTAL ASSETS                                                    $  2,222,073
                                                                =============
LIABILITIES AND STOCKHOLDERS' DEFICIT
-------------------------------------

CURRENT LIABILITIES
  Accounts payable                                              $    161,167
  Accrued payroll & related expenses                                 285,324
  Other accrued liabilities                                           30,444
  Unearned revenue                                                   205,141
  Current portion of long term liabilities                            78,824
                                                                 ------------
    Total Current Liabilities                                        760,900
                                                                 ------------
LONG-TERM DEBT
  Deferred bonus                                                     600,000
  Notes and other liabilities                                      1,139,307
                                                                 ------------
    Total Liabilities                                              2,500,207
                                                                 ------------
COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' DEFICIT
  Preferred Stock, no par value, 10,000,000
    shares authorized; no shares issued                                    -
  Common Stock, $.05 par value, 40,000,000
    shares authorized; 19,621,701 shares
    issued and outstanding                                           981,085
  Additional paid-in capital                                      16,440,858
   Accumulated deficit                                           (17,700,077)
                                                                 ------------
    Total Stockholders' Deficit                                     (278,134)
                                                                 ------------

                                                                 $ 2,222,073
                                                                 ============

 See accompanying notes to consolidated condensed financial statements
                                3
<PAGE>
<TABLE>
<CAPTION>



          BROADCAST INTERNATIONAL, INC. AND SUBSIDIARIES
         CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
                           (Unaudited)

                                  Three Months Ended         Six Months Ended
                             --------------------------- ---------------------------
                                June 30,      June 30,      June 30,     June 30,
                                  2004          2003          2004         2003
                             ------------- ------------- ------------- -------------

                          <c>           <c>           <c>           <c>

REVENUES:
  Net sales                  $  1,556,040  $  1,201,913  $  2,931,896  $  2,710,541
  Interest and other income        14,958         4,007        17,403         5,476
                             ------------- ------------- ------------- -------------
                                1,570,998     1,205,920     2,949,299     2,716,017
COSTS AND EXPENSES:
  Cost of sales                 1,511,644     1,181,176     2,869,691     2,382,829
  Research and development
   in process                  10,343,945             -    11,519,377             -
  Administrative and general      296,504       302,072       989,025       502,640
  Selling and marketing           265,086       246,830       458,266       430,514
  Interest                        445,657           418       795,306         2,116
                             ------------- ------------- ------------- -------------

                               12,862,836     1,730,496    16,631,665     3,318,099
                             ------------- ------------- ------------- -------------
LOSS FROM OPERATIONS
 BEFORE INCOME TAXES          (11,291,838)     (524,576)  (13,682,366)     (602,082)

   Income Tax Benefit                   -             -             -             -
                             ------------- ------------- ------------- -------------

       NET LOSS              $(11,291,838) $   (524,576) $(13,682,366) $   (602,082)
                             ============= ============= ============= =============
TOTAL NET LOSS PER SHARE
   - Basic and Diluted       $       (.59) $       (.03) $       (.73) $       (.04)
                             ============= ============= ============= =============
Weighted average number of
shares of Common Stock
outstanding
    - Basic and Diluted        19,019,793    16,741,703     18,663,465   15,996,195
                             ============= ============= ============== ============













           See accompanying notes to consolidated condensed financial statements

                                4
</TABLE>
<PAGE>
<TABLE>
<CAPTION>


          BROADCAST INTERNATIONAL, INC. AND SUBSIDIARIES
         CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
                           (Unaudited)

                                                          Six Months Ended
                                                      ---------------------------
                                                         June 30,     June 30,
                                                           2004         2003
                                                      ------------- -------------

                                                   <c>           <c>
CASH FLOWS FROM OPERATING ACTIVITIES
  Net loss                                            $(13,682,366) $   (602,082)
  Adjustments to reconcile net loss to net cash
  (used in) provided by operating activities:
     Depreciation and amortization                         202,199       201,060
     Deferred bonus payable                                      -       120,000
     Beneficial conversion                                 795,230             -
     Common stock issued for services                      420,000             -
     Common stock and options issued for research and
       development in process                           10,228,019             -
     Liability assumed for research and development
       in process                                        1,291,358
     Provision for losses on accounts receivable            26,000       (10,000)
     (Increase) decrease in:
        Receivables                                       (287,645)      595,656
        Inventories                                         50,334       (20,603)
        Other assets                                       (15,903)      (27,453)
     Increase (decrease) in:
        Accounts payable and accrued expenses               70,594       (44,067)
        Unearned revenue                                   (51,822)      (96,765)
                                                      ------------- -------------
        Net cash (used in) provided by
         operating activities                             (954,002)      115,746

CASH FLOWS FROM INVESTING ACTIVITIES:

  Purchase of equipment                                    (32,779)     (115,924)
  Technology patents                                      (137,552)            -
  Investment in related party                                    -      (120,000)
                                                      ------------- -------------
        Net cash used in investing activities             (170,331)     (235,924)

CASH FLOWS FROM FINANCING ACTIVITIES:
  Payments on capital leases                               (13,830)      (81,948)
  Related party note receivable, net                      (182,800)            -
  Proceeds from the sale of Stock                          465,362       898,731
  Loan proceeds                                            795,230             -
                                                      ------------- -------------
       Net Cash provided by financing activities         1,063,963       816,783
                                                      ------------- -------------

NET CHANGE IN CASH AND CASH EQUIVALENTS                    (60,371)      696,605

CASH AND CASH EQUIVALENTS, BEGINNIG OF PERIOD              314,667       316,166
                                                      ------------- -------------
CASH AND CASH EQUIVALENTS, END OF PERIOD              $    254,296  $  1,012,771
                                                      ============= =============






See accompanying notes to consolidated condensed financial statements

                                5

</TABLE>
<PAGE>


          BROADCAST INTERNATIONAL, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Unaudited)
                          June 30, 2004

NOTE A - BASIS OF PRESENTATION

         The accompanying unaudited consolidated condensed financial
statements have been prepared in accordance with U.S. generally accepted
accounting principles for interim financial information and the instructions
to Form 10-QSB and Rule 310 of Regulation S-B.  Accordingly, they do not
include all of the information and footnote disclosures required by accounting
principles generally accepted in the United States of America.  In the opinion
of management, all adjustments (consisting only of normal recurring
adjustments) considered necessary for a fair presentation have been included.
Operating results for the three months and the six months ended June 30, 2004
are not necessarily indicative of the results that may be expected for the
year ending December 31, 2004.  For further information, refer to the
consolidated financial statements and footnotes thereto for the year ended
December 31, 2003 included in the Company's Annual Report on Form 10-KSB (file
number 0-13316).

NOTE B - GOING CONCERN

         The accompanying financial statements have been prepared under the
assumption that the Company will continue as a going concern.  Such assumption
contemplates the realization of assets and the satisfaction of liabilities in
the normal course of business. The financial statements do not include any
adjustments that might be necessary should the Company be unable to continue
as a going concern.  The Company's continuation as a going concern is
dependent upon its ability to generate sufficient cash flow to meet its
obligations on a timely basis, to obtain additional financing as may be
required, and ultimately to attain profitability.  Potential sources of cash
include external debt and the sale of new shares of company stock or
alternative methods such as mergers or sale transactions.  No assurances can
be given, however, that the Company will be able to obtain any of these
potential sources of cash.


NOTE C - RECLASSIFICATIONS

         Certain 2003 financial statement amounts have been reclassified to
conform to 2004 presentations.


NOTE D - WEIGHTED AVERAGE SHARES

         The computation of basic earnings (loss) per common share is based on
the weighted average number of shares outstanding during each year.

         The computation of diluted earnings per common share is based on the
weighted average number of common shares outstanding during the periods
presented, plus the common stock equivalents that would arise from the
exercise of stock options and warrants outstanding, using the treasury stock
method and the average market price per share during the periods presented.
Options to purchase 6,030,903 and 3,185,427 shares of common stock at prices
ranging from $.02 to $60.63 per share were outstanding at June 30, 2004 and


                                6
<PAGE

2003, respectively, but were excluded for the calculation of diluted earnings
per share because the effect of stock options was anti-dilutive.

NOTE E - STOCK COMPENSATION

         The Company accounts for stock-based compensation under the
recognition and measurement principles of APB Opinion No. 25, Accounting for
Stock Issued to Employees, and related Interpretations.  The Company has
adopted the disclosure-only provisions of Statement of Financial Accounting
Standards (SFAS) No. 123, Accounting for Stock-Based Compensation.
Accordingly, no compensation cost has been recognized in the financial
statements for employees, except when the exercise price is below the market
price of the stock on the date of grant. Had compensation cost for the
Company's stock option plans been determined based on the fair value at the
grant date for awards in fiscal year 2004 and 2003 consistent with the
provisions of SFAS No. 123, the Company's approximate net loss and loss per
share would have been the pro forma amounts indicated below:

<TABLE>
<CAPTION>

                                 Three Months Ended           Six Months Ended
                                      June 30,                    June 30,
                                 2004          2003          2004           2003
                               ------------- ------------ ------------- ------------

                            <c>           <c>          <c>           <c>
Net loss, as reported          $(11,291,838) $  (524,576) $(13,682,366) $  (602,082)
 Addback:
   Stock-based employee
   compensation expense
   determined under intrinsic
   value based method for all
   awards, net of related tax
   effects                                -            -             -            -
 Deduct:
   Total stock- based employee
   compensation expense
   determined under fair value
   based method for all awards,
   net of related tax effects      (124,767)           -      (241,973)     (23,398)

                               ------------- ------------ ------------- ------------

   Pro forma net loss          $(11,416,605) $  (524,576) $(13,924,339) $  (625,480)
                               ============= ============ ============= ============
  (Loss) earnings per share:
     Basic and diluted -
     as reported               $       (.59) $      (.03) $       (.73) $      (.04)
                               ============= ============ ============= ============
     Basic and diluted -
     pro forma                 $       (.60) $      (.03) $       (.75) $      (.04)
                               ============= ============ ============= ============
</TABLE>

The weighted average fair value of options granted during the three and six
months ended June 30, 2004 was $3.07 and $2.32 per share, respectively. The
fair value for the options granted in the three months ended June 30, 2004
were estimated at the date of grant using a Black Scholes option pricing model
with the following weighted average assumptions:

     Risk free interest rate      4.04%
     Expected life (in years)     8
     Expected volatility          37.49%
     Expected dividend yield      0.00%

                                7
<PAGE>
<PAGE>
NOTE F - SUPPLEMENTAL CASH FLOW INFORMATION

         For the six months ended June 30, 2004, a non-cash expense of
$420,000 was recorded in Administrative and General Expense for services
rendered by consultants compensated by the issuance of 105,000 shares of
common stock.


         On May 18, 2004 an Order Confirming the Debtor in Possession's Plan
of Reorganization (the Plan) in the bankruptcy case for Interact Devices, Inc.
(IDI) was issued. As a result of this action, the Company was issued
approximately 50,127,218 shares of the common stock of IDI representing
approximately 79% of the outstanding stock of IDI. The Company recorded the
following amounts related to the acquisition of research and development in
process from IDI from the assumption of liabilities and consolidation of IDI:

         Receivable from IDI                      $  (265,008)
         Liabilities assumed from IDI               (1,066,773)
         Research and development in process         1,291,358
         Trade receivables, net                         13,506
         Inventory                                       6,997
         Prepaid expenses                                2,166
         Equipment                                      46,450
         Accounts payable and accrued liabilities      (28,696)
                                                  -------------
                                                             -

In accordance with the Plan, in exchange for the common shares of IDI, the
Company issued 120,308 shares of common stock of Broadcast International, Inc.
valued at approximately $733,866 to the former creditors of IDI. Additional
payments totaling approximately $332,907 will be made to the former IDI
creditors in equal quarterly installments of approximately $20,000 over of the
next four years, which together total the $1,066,773 liabilities assumed by
the Company.

         Additionally, the principals of Streamware Solutions AB, a Swedish
Corporation, purchased 187,500 shares of common stock below fair market value
pursuant to a Stock Purchase and Option Grant Agreement dated February 6,
2004. Streamware was issued an additional 1,000,000 shares of common stock
pursuant to a Stock Issuance and Option Grant Agreement also dated February 6,
2004. The Company also issued to Streamware or its principals 2,812,500
options to purchase common shares of the Company at an exercise price of $4.50
per share, expiring February 6, 2006, associated with the agreements mentioned
above. These agreements were entered concurrently with IDI entering into an
amended Partner Agreement with Streamware, and all expenses associated with
Streamware and the IDI bankruptcy settlement above were recorded as Research
and Development in Process, as part of the on-going development costs of the
CodecSys technology.  The Company recorded the following related to these
agreements:

         Research and development in process expense,
            stock issued below market                       375,000
         Research and development in process expense,
            additional stock issued                       6,000,000
         Research and development in process expense,
            fair value of stock options                   3,853,019
         Common stock                                       (50,000)
         Additional paid-in capital                     (10,178,019)
                                                        ------------
                                                                  -

                                8
<PAGE>
         On December 23, 2003, the Company entered into a convertible line of
credit for up to $1,000,000 with Meridel LTD and Pascoe Holdings LTD, both
Turks and Caicos corporations. The Company may obtain advances as needed to
fund operating expenses. On June 30, 2004 the Note was amended to increase the
limit from $1,000,000 to $2,000,000 with the original due date of the Note
extended from March 31, 2005 to April 1, 2006. Any portion of the note is
convertible at the lenders sole discretion, for common shares of the Company
at the rate of $1.00 per share. During the six months ended June 30, 2004, the
Company borrowed an additional $795,230 making the total amount borrowed
$895,210. Although the note bears an annual interest rate of 6%, which would
be forgiven upon conversion, the Company believes the entire amount of the
note will be converted, whereby it has recorded the beneficial conversion
feature of the note. During the six months ended June 30, 2004, the Company
recorded $795,230 as a beneficial conversion feature associated with the
advances made under this line of credit. The $795,230 is included in interest
expense.

         The Company paid no cash for income taxes or interest expense during
the three and six months ended June 30, 2004 and 2003.


NOTE G - SUBSEQUENT EVENT

         None.




Item 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

Forward-Looking Information

     This report on Form 10-QSB includes "forward-looking statements" within
the meaning of Section 27A of the Securities Act of 1933, and Section 21E of
the Securities Exchange Act of 1934.  These forward-looking statements may
relate to such matters as anticipated financial performance, future revenues
or earnings, business prospects, projected ventures, new products and
services, anticipated market performance and similar matters.  When used in
this report, the words "may," "will," expect," anticipate," "continue,"
"estimate," "project," "intend," and similar expressions are intended to
identify forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934
regarding events, conditions, and financial trends that may affect the
Company's future plans of operations, business strategy, operating results,
and financial position.  The Private Securities Litigation Reform Act of 1995
provides a safe harbor for forward-looking statements.  To comply with the
terms of the safe harbor, we caution readers that a variety of factors could
cause our actual results to differ materially from the anticipated results or
other matters expressed in forward-looking statements.  These risks and
uncertainties, many of which are beyond our control, include (i) the
sufficiency of existing capital resources and the Company's ability to raise
additional capital to fund cash requirements for future operations; (ii)


                                9
<PAGE>

uncertainties involved in the rate of growth of the Company's business and
acceptance of the Company's products and services; (iii) volatility of the
stock market, particularly within the technology sector; and (iv) general
economic conditions.  Although the Company believes the expectations reflected
in these forward-looking statements are reasonable, such expectations may
prove to be incorrect.


Results of Operations for the three months ended June 30, 2004 and June 30,
2003

Revenues

      The Company generated approximately $1,556,000 in revenue during the
three months ended June 30, 2004.  During the same three-month period in 2003,
the Company generated revenue of approximately $1,202,000.  The increase in
revenue of $354,000 was due primarily to an increase in sales of equipment to
customers of $ 510,000, which was offset by a decrease in license fees of
approximately $145,000.

Cost of Revenues

      Costs of Revenues increased by approximately $331,000 to $1,512,000 for
the three months ending June 30, 2004, from $1,181,000 for the three months
ending June 30, 2003.  The increase was due primarily to the increased sales
of equipment referenced above, which resulted in an increase in the cost of
equipment sold to the Company's customers of $384,000. There was not an
increase in the cost of equipment relative to the sales price of the
equipment. The increase in costs of revenues was partially offset by a
decrease of $28,000 in operating costs and $27,000 in satellite distribution
costs.

Research and Development in Process

      The Company recorded a non-cash expense of approximately $10,344,000 in
the three months ending June 30, 2004.  All of this expense related primarily
to clarification of marketing and development rights through amendments to
existing technology licensing agreements and partially for the active
development of the Company's CodecSys  technology. Details of this expense are
as follows: 1) $6,000,000 for the issuance of 1,000,000 shares of common stock
of Company to Streamware Solutions AB, a Swedish company, 2) approximately
$3,053,000 for options to purchase 1,500,000 shares of common stock of the
Company at an exercise price of $4.50 per share, 3) approximately $1,066,000
to provide funding to former Interact Devices, Inc. ("IDI") creditors as
specified in IDI's Plan of Reorganization, offset by approximately $40,000 of
net assets obtained from IDI 4) approximately $265,000 in cancellation of a
note due the Company from IDI. The issuance of stock and options were recorded
as an expense due to the amendments to existing technology licensing
agreements. See additional details in Note F and Part II, Item number 5.


Expenses

      Operating Expenses for the three months ending June 30, 2004 were
approximately $561,600 compared with operating expenses for the three months
ending June 30, 2003 of approximately $548,900.  The increase of approximately
$12,700 resulted from an increase in various expense items offset by an
decrease in salaries.

                                10
<PAGE>

Other

      For the three months ended June 30, 2004, the Company incurred interest
expense of $445,657 compared to interest expense for the three months ended
June 30, 2003 of $418.  The full amount of the increase resulted from the
Company recording interest expense related to the beneficial conversion
feature on the Convertible Note and assuming that the note holder will
exercise its option to convert and satisfy the obligation through conversion.

      The Company realized a net loss for the three months ending June 30,
2004 of $11,291,838 compared with a net loss for the three months ended June
30, 2003 of $524,576. Of the net loss for the quarter ended June 30, 2004,
$10,343,945, or approximately 92% resulted from additional costs of Research
and Development in Process. The other significant factor is the increase to
$445,657 in interest expense from the beneficial conversion feature of the
convertible note. Absent these two items, the total loss for the three months
ended June 30, 2004 would have been $502,236, a decreased net loss of
approximately $22,000 when compared to the net loss for the three months ended
June 30, 2003.

Results of Operations for the six months ended June 30, 2004 and June 30, 2003

Revenues

      The Company generated approximately $2,932,000 in revenue during the six
months ended June 30, 2004.  During the same six-month period in 2003, the
Company generated revenue of approximately $2,711,000.  The increase in
revenue of $221,000 was primarily a combination of an increase in sales of
equipment to customers of $ 814,000 and an increase in studio and video
production revenue of $205,000, which was offset by a decrease in license fees
of approximately $454,000 and a decrease in installation and service revenue
of approximately $405,000.

Cost of Revenues

      Costs of Revenues increased by approximately $487,000 to $2,870,000 for
the six months ending June 30, 2004, from $2,383,000 for the six months ending
June 30, 2003.  The increase was due primarily to the increased sales of
equipment referenced above, which resulted in an increase in the cost of
equipment sold to the Company's customers of $579,000. There was not an
increase in the cost of equipment relative to the sales price of the
equipment. The increase in costs of revenues was partially offset by a
decrease of $35,000 in operating costs and $59,000 in satellite distribution
costs.

Research and Development in Process

      The Company recorded a non-cash expense of $11,519,377 in the six months
ending June 30, 2004.  All of this expense related primarily to clarification
of marketing and development rights through amendments to existing technology
licensing agreements and partially for the active  development of the
Company's CodecSys  technology. Details of this expense are as follows: 1)
$6,375,000 for the issuance of 1,187,500 shares of common stock of Company to
Streamware Solutions AB, a Swedish company, and its principals; 2)
approximately $3,853,000 for options to purchase 2,812,500 shares of common
stock of the Company at an exercise price of $4.50 per share, 3) approximately
$1,066,000 to provide funding to former Interact Devices, Inc. ("IDI")


                                11
<PAGE>

creditors as specified in IDI's Plan of Reorganization, offset by
approximately $40,000 of net assets obtained from IDI 4) approximately
$265,000 in cancellation of a note due the Company from IDI. The issuance of
stock and options were recorded as an expense due to the amendments to
existing technology licensing agreements. See additional details in Note F and
Part II, Item number 5.

Expenses

      Operating Expenses for the six months ending June 30, 2004 were
approximately $1,447,000 compared with operating expenses for the six months
ending June 30, 2003 of approximately $933,000.  The increase of approximately
$514,000 resulted primarily from two items; 1) $420,000 from the issuance of
105,000 shares of common stock for services rendered by outside consultants
assisting the Company in positioning the development of the CodecSys
technology, 2) approximately $60,000 increase in general and administrative
expense for additional legal, audit and investor relations costs associated
with being publicly traded, 3) Other material items include an increase of
approximately $154,000 in sales and marketing expenses primarily due to
additional presence at trade shows offset by a decrease in other operating
expenses of approximately $126,000.

Other

      For the six months ended June 30, 2004, the Company incurred interest
expense of approximately $795,000 compared to interest expense for the six
months ended June 30, 2003 of approximately $2,000.  The full amount of the
increase resulted from the Company recording interest expense related to the
beneficial conversion feature on the Convertible Note and assuming that the
note holder will exercise its option to convert and satisfy the obligation
through conversion.

      The Company realized a net loss for the six months ending June 30, 2004
of approximately $13,682,000 compared with a net loss for the six months ended
June 30, 2003 of approximately $602,000. The increase in the net loss for the
six months ended June 30, 2004 was $13,121,000 of which $11,980,000 resulted
primarily from five non cash expenses: 1) $6,375,000 for the issuance of
1,187,500 shares of common stock of Company to Streamware, 2) approximately
$3,853,000 for options to purchase 2,812,500 shares of common stock of the
Company at an exercise price of $4.50 per share, 3) approximately $1,066,000
to provide funding to former IDI creditors as specified in The Plan of
Reorganization, offset by approximately $40,000 of net assets obtained from
IDI 4) approximately $265,000 fulfillment of a note due the Company from IDI,
5) $420,000 from the issuance of common stock for services rendered by outside
consultants assisting the Company in positioning the development and
deployment of the CodecSys technology. Interest expense of approximately
$795,000 from the beneficial conversion feature of the convertible note was
recorded by the Company. Absent the treatment of the non cash expenses
described above, and the beneficial conversion feature interest, the total
loss for the six months ended June 30, 2004 would have increased by
approximately $347,000 when compared to the net loss for the six months ended
June 30, 2003.

                                12
<PAGE>


Liquidity and Capital Resources

      At June 30, 2004, the Company had cash of approximately $254,000 and
total current assets of $1,164,000 compared to total current liabilities of
$760,900 and total stockholder's deficit of ($278,000).

For the six months ended June 30, 2004, the Company used $954,002 of cash for
operating activities compared to cash provided from operations for the six
months ended June 30, 2003 of $115,746. The cash used in operations was
provided primarily from proceeds from sales of Company common stock and from
loan financing.

      The Company estimates that its monthly expenses over the next several
months will exceed its monthly income by between approximately $100,000 and
$150,000 per month, depending on the level of activity of the Company. The
Company anticipates that its negative cash flow will diminish somewhat as a
result of recent sales activity.  However, to the extent the Company continues
to experience a revenue shortfall between its sales activities and the
Company's operating costs, the Company will continue to have the need for
infusions of capital over at least the next several months.  To date, the
Company has met its working capital needs through payments received from sales
of its common stock and borrowings under a convertible line of credit
agreement.  There can be no assurance that the Company will continue to
receive loans or equity contributions if the Company does not demonstrate
increased revenues and other favorable operating results over the next several
months.  In the event payments were to terminate, for any reason, the Company
would be in immediate need of another source of capital or would be required
to restructure its development program and reduce its costs, which may have a
negative impact on the Company and its ability to continue with its business
plan.  The dilution experienced by the existing shareholders in the event of
such additional capital infusions cannot be determined at this time.   There
can be no assurance that, in such event, the Company will be able to locate a
source of capital on terms acceptable to the Company, if at all.

Risk Factors and Cautionary Statements

      This quarterly report contains certain forward-looking statements.  The
Company wishes to advise readers that actual results may differ substantially
from such forward-looking statements.  Forward looking statements involve
risks and uncertainties that could cause actual results to differ materially
from those expressed in or implied by the statements, including but not
limited to, the following: the ability of the Company to maintain a sufficient
customer base to have sufficient revenues to fund and maintain its operations,
and the ability of the Company to meet its cash and working capital needs, and
to have sufficient revenues to continue operations.

Item 3.  Controls and Procedures

      Evaluation of Disclosure Controls and Procedures.  Based upon an
evaluation under supervision and with the participation of Registrant's
management, as of June 30, 2004, Registrant's principal executive officer and
principal financial officer has concluded that the Registrant's disclosure
controls and procedures (as defined in Rules 13a-14(c) and 15d-14(c)) under
the Securities Exchange Act of 1934, are effective to ensure that information
required to be disclosed (in reports that we file or submit under that

                                13
<PAGE>


Exchange Act) is recorded, processed, summarized and reported within the  time
periods specified in SEC rules and forms.

      Changes in Internal Accounting.  There were no significant changes in
Registrant's internal controls or other factors that could significantly
affect these controls subsequent to the date of their evaluation.  There were
no significant deficiencies or material weaknesses, and therefore there were
no corrective actions taken.  However, the design of any system of controls is
based in part upon the assumptions about the likelihood of future events, and
there is no certainty that any design will succeed in achieving its stated
goal under all potential future considerations, regardless of how remote.


                                14
<PAGE>

                   Part II - Other Information

Item 1.  Legal Proceedings

      None.

Item 2.  Changes in Securities and Small Business Issuer Use of Proceeds.

      On February 6, 2004, the Company issued 187,500 shares of common
stock of the Company to six individuals in exchange for $375,000. In
addition, the Company granted options to the same individuals to purchase
1,312,500 shares of common stock of the Company at $4.50 per shares.  The
options are exercisable at any time for a two year period from the date of
grant. The shares and options were issued as part of a larger transaction
related to the amendment of a technology license agreement.

      On June 7, 2004, the Company issued 22,500 shares of common stock to
three individuals in exchange for $90,000.

      On May 28, 2004, the Company issued 120,308 shares of common stock to
30 individuals and companies related to the satisfaction of the Company's
obligation to fund a Bankruptcy Plan of Reorganization.  See Item 5 for
additional information.  The Company relied on exemptions under the
Bankruptcy Code for this issuance.

      On February 6, 2004 the Company entered into an agreement to issue
1,000,000 shares of common stock to Streamware Solutions, AB., a Swedish
company, in consideration of Streamware amending a technology license
agreement.  The Company also granted to Streamware options to purchase up
to 1,500,000 shares of common stock of the Company at an exercise price of
$4.50 per share.  The options are exercisable for a two year period from
the date of grant.

      On June 30, 2004, the Company amended and restated a Convertible Line
of Credit Promissory Note ("Note") dated December 23, 2004, under the terms
of which the Lenders have the right to convert the principal and interest
under the Note to common stock of the Company.  The total amount of
advances that may be made under the Note is $2,000,000,approximately
$1,000,000 of which has been made to date.  The conversion price under the
Note is $1.00 per share.  The Note also contains registration provisions
under which the Company will have the responsibility to register the stock
issued at the time of conversion. The conversion may take place at any time
until the Note is repaid, the due date for which is April 1, 2006.

      The Company granted options to purchase 233,000 shares of common
stock of the Company to employees and options to purchase 25,000 shares to
a consultant.  The options are exercisable at prices between $4.00 and
$6.05 per share. These options were granted pursuant an exemption contained
in  Rule 701.

      For each of the issuances of unregistered stock referenced above,
except for those shares of stock issued pursuant to the IDI Plan of
Reorganization described herein and the options to purchase stock, the
Company relied upon an exemption from registration under Section 4(2) of
the Securities Act of 1933.

                               15
<PAGE>

Item 3.  Defaults Upon Senior Securities

      None.

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

      None.

Item 5.  Other Information

      On May 18, 2004, the Plan of Reorganization (the "Plan") filed by
Interact Devices, Inc. on April 8, 2004, was confirmed by the United States
Bankruptcy Court. The Company had entered into an agreement with Interact
Devices, Inc. ("IDI") to provide the funding required by IDI's Plan of
Reorganization. As a result of the confirmation, the Company received
50,127,218 shares of common stock of IDI, these shares along with
approximately 1,299,501 convertible preferred shares of stock previously
owned by the Company, represents an approximate 79% ownership of IDI.
Funding of the Plan provided by the Company to former creditors of IDI, was
in the form of issuing 120,308 shares of common stock of the Company valued
at approximately $733,866 along with deferred cash payments totaling
approximately $332,907 to be remitted over the next four years in equal
quarterly payments of approximately $20,000 per quarter.

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

(a) Exhibits


Exhibit 31.1  Certification of Chief Executive Officer Pursuant to Rule 13a
    -14(A) of the Securities Exchange Act of 1934, As Amended, As Adopted
     Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Exhibit 31.2  Certification of Chief Financial Officer Pursuant to Rule
     13a-14(A) of the Securities Exchange Act of 1934, As Amended, As
     Adopted  Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Exhibit 32.1  Certification of Chief Executive Officer Pursuant to 18
      U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the
      Sarbanes-Oxley  Act of 2002

Exhibit 32.2 Certification of Chief Financial Officer Pursuant to 18 U.S.C.
     Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley
     Act of 2002

(b)  Reports on Form 8-K

     None.

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<PAGE>

                           SIGNATURES

      In accordance with the requirements of the Exchange Act, the
registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.


                                  Broadcast International, Inc.


Date: August 19, 2004             /s/ Rodney M. Tiede
                                -------------------------------------------
                                By:   Rodney M. Tiede
                                Its:  President and Chief Executive
                                      Officer
                                      (Principal Executive Officer)




Date: August 19, 2004             /s/ Randy Turner
                                -------------------------------------------
                                By:   Randy Turner
                                Its:  Chief Financial Officer
                                      (Principal Financial and Accounting
                                      Officer)



                               17