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

                                    FORM 10-K

              ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                   For the fiscal year ended December 31, 1998

                        Commission file number: 33-42633

                              ViaGrafix Corporation
                              ---------------------
             (Exact name of registrant as specified in its charter)

          Oklahoma                                               73-1354168
          --------                                               ----------
(State or other jurisdiction                                  (I.R.S. Employer
     of incorporation)                                       Identification No.)

                     One American Way, Pryor, Oklahoma 74361
                     ---------------------------------------
               (Address of principal executive offices)(Zip Code)

Registrant's telephone number, including area code:      (918) 825-6700

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

                          Common Stock, par value $.01
                          ----------------------------
                                (Title of Class)

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

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

The aggregate market value of Registrant's  voting stock held by  non-affiliates
of the  registrant  as of March 19, 1999,  was  approximately  $19,355,000.  For
purposes of this computation,  all officers,  directors and 5% beneficial owners
of Registrant are deemed to be affiliates.

As of March 19, 1999,  Registrant had outstanding a total of 5,788,184 shares of
its $.01 par value Common Stock.

                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of  Registrant's  definitive  Proxy Statement to be filed in connection
with  the  Annual  Meeting  of  Stockholders  to  be  held  May  20,  1998,  are
incorporated into Part III.


<PAGE 2>


                              ViaGrafix Corporation
                             Form 10-K Annual Report
                      For the Year Ended December 31, 1998

                                Table of Contents


Item Number and Caption                                              Page Number

Part I.
-------
Item 1.           Business                                                 3

Item 2.           Properties                                               9

Item 3.           Legal Proceedings                                        9

Item 4.           Submission of Matters to a Vote of Security Holders     10


Part II.
--------
Item 5.           Market for Registrant's Common Equity and Related
                  Stockholder Matters                                     10

Item 6.           Selected Financial Data                                 10

Item 7.           Management's Discussion and Analysis of Financial
                  Condition and Results of Operations                     11

Item 7a.          Quantitative and Qualitative Disclosures About
                  Market Risk                                             23

Item 8.           Financial Statements and Supplementary Data             23

Item 9.           Changes in and Disagreements with Accountants and
                  Financial Disclosure                                    23


Part III.
---------
Item 10.          Directors and Executive Officers of Registrant          23

Item 11.          Executive Compensation                                  24

Item 12.          Security Ownership of Certain Beneficial Owners
                  and Management                                          24

Item 13.          Certain Relationships and Related Transactions          24


Part IV.
--------
Item 14.          Exhibits, Financial Statement Schedules and Reports
                  on Form 8-K                                             24


Signatures                                                                25


<PAGE 3>


PART I.

Item 1. Business

GENERAL

     ViaGrafix  Corporation  (the  "Company")  develops,  produces  and  markets
technology-based  information  technology  ("IT") training products and graphics
software products. The Company's IT training courses include video tutorials and
interactive multimedia training courses delivered on CD-ROM, LANs, intranets and
the Internet for a variety of computer  software.  ViaGrafix  has  developed and
markets  more than 950  training  courses for most major PC  software  packages.
These products  provide an  audio-visual  environment  that is designed to allow
users to learn faster and increase  retention  and  productivity.  Organizations
that purchase the Company's multimedia training products can offer them across a
network to all employees.  The Company's  principal  graphics  software product,
DesignCAD, is a computer-aided design ("CAD") package sold worldwide.  ViaGrafix
also produces several other CAD-related  software packages.  In 1998 the Company
introduced  ViaDraw,  its  initial  entry into a new line of  graphics  software
products for the retail market.  The primary platforms for both the training and
software  products  are Windows  3.1,  Windows  95,  Windows 98, and Windows NT.
Through its wholly  owned  subsidiary,  Make It So,  Inc.,  an  Internet  direct
marketing  company,  the Company  provides e-mail list  management  services and
operates an Internet online community.

     ViaGrafix was founded in 1990 to create training  products for the PC user,
and it developed a library of computer  training  videos for computer  software,
such as word processors,  spreadsheets and operating  systems.  The business was
expanded to include both business and home computer  software  training products
and, with the acquisition of American Small Business Computers, Inc. ("ASBC") in
August 1995, now includes the development and marketing of PC graphics software.
On July 31, 1998,  with the  acquisition of Make It So, Inc. ("Make It So"), the
Company's  product  offerings were further  expanded to include  Internet direct
marketing with broadcast e-mail for businesses,  and an online community of over
450,000  members that enables  members to purchase  products at a discount  from
advertised retail prices.

     Potential  training customers include anyone who has a need to learn to use
computer software,  including  individuals,  small businesses,  corporations and
government agencies. Graphics software customers include architects,  engineers,
designers  and  hobbyists.  Potential  customers  for  Make  It So  include  any
individuals and businesses that are Internet-active.

     ViaGrafix sells its products through  distributors and resellers and direct
to end-users.  ViaGrafix  uses its own catalog,  promotion of its 800 number and
its  Internet  web site to sell  training  and  software  products  directly  to
end-users.  Direct sales are also  achieved by  direct-mail  advertising  to the
Company's  database of existing  customers and exhibition at  approximately  100
trade shows, such as COMDEX, throughout the United States annually.

     The  Company  has  experienced  growth  in  revenues  since  its  inception
primarily as a result of internal product development.  The Company's sales have
grown from $4.9 million in 1994 to $18.8 million in 1998.


Industry Background

     Training  Market.  With the  proliferation  of computers,  there has been a
continually  increasing need for training and educational products for computers
and software, and for better,  easier-to-use  software products.  Businesses and
organizations are becoming increasingly dependent upon computer systems in order
to remain  competitive  in their  marketplace.  This has resulted in significant
growth in the IT training market.  According to  International  Data Corporation
("IDC"),  the U.S.  market for  computer  education  and  training  grew to $8.3
billion in 1997 and is expected to reach $14 billion by the year 2002.

<PAGE 4>

     The IT training  market is diverse,  consisting of a variety of product and
service  providers.  Technology-based  training  products for IT include  CD-ROM
based   training,   video-based   training  and   Internet-delivered   training.
Non-technology-based  training  products for IT include  books and other written
materials.  Service  providers  include  technology  manufacturers,   commercial
trainers,  consulting firms,  value-added  resellers,  computer dealers,  system
integrators,  network  integrators,   colleges,  universities,  and  independent
service organizations.

     The majority of IT training is still delivered by instructor-led  training,
which accounted for $6.5 billion,  or 78% of the total market, in 1997. However,
for  several  years  instructor-led  training  has grown at a slower rate and is
expected   to   continue  at  a  slower  rate  than  IT  training  as  a  whole.
Technology-based  IT training is quickly  gaining  acceptance as a competent and
efficient method for software education.  IDC estimates that technology-based IT
training  [which  includes  computer-based  training  (CBT)   CD-ROM/multimedia,
video-based  training and  electronic  performance  support  systems  (EPSS) and
distance  learning] will grow from $1.5 billion in 1997 to $7.7 billion in 2002,
representing an annual growth rate of 40%.

     Graphics  Software  Market.  Graphics  software  for Windows  includes  CAD
software,  three-dimensional  modeling  software,  general  drawing  and  design
software.

     With the increase in the use of Windows,  computers are increasingly  being
used for  design  and other  graphics  intensive  tasks.  New  users of  Windows
graphics software will be looking for easy-to-learn,  easy-to-use  software that
is affordable.


The ViaGrafix Solution

     ViaGrafix   designs,   develops,    markets,   sells   and   supports   its
technology-based  IT training  products and graphics  software products based on
the following principles:

     Leverage  Internet  Technologies.  The Company's  products  employ Internet
technologies  for  delivery  and  communication.  The  Company's  multimedia  IT
training  products are available via corporate  intranets and the Internet.  The
Company's  software products utilize Internet  technologies by offering Internet
file compatibility and direct e-mail support.

     Optimize Training Products for Productivity. ViaGrafix develops and markets
training courses that teach people how to use popular software  packages such as
Microsoft  Excel,   Microsoft  Word,   Microsoft   Windows,   Lotus  1-2-3,  and
WordPerfect.  These  educational  courses offer many advantages over traditional
instructor-led training. These courses allow users to fit training to their work
schedules, begin training at a level that is appropriate for them, train only on
the topics that are  relevant to their needs and  practice and test their skills
as they learn.

     Offer a Broad Range of Training  Products.  ViaGrafix  develops and markets
training  courses that teach  people how to use a diverse  selection of software
applications,  such as PageMaker, DesignCAD, CorelDraw, ACT!, and FrontPage. The
Company also  develops and markets  training  courses that teach more  technical
topics,  such as MCSE certification,  Visual C++ programming,  Visual Basic, and
HTML programming.

     Offer  Easy-to-Use  Graphics  Software  Products.   ViaGrafix  designs  its
graphics  software  products,  including  DesignCAD  and  ViaDraw,  to be  fully
functional,   easy-to-learn   and  easy-to-use.   These  products  are  used  by
architects,  engineers,  inventors, designers, home hobbyists and others needing
computer-aided drafting and computer drawings.

     Offer Products with Superior Value.  ViaGrafix attempts to develop products
that can be marketed at a lower price than similar competing products.

     Release Products to the Market Quickly.  ViaGrafix  attempts to develop its
products and release them to the market in a relatively short time frame.

<PAGE 5>

Growth Strategy

     The Company's objective is to become a leading provider of technology-based
IT training products and graphics software products to the computer market.  The
following  are the key  elements  of the  Company's  strategy  to  achieve  that
objective:

     Expand Internet Sales and Delivery.  The Company believes that its products
are well  positioned  for Internet  commerce.  The price points of the products,
which typically fall between $20 and $100, are affordable,  and the products can
appeal to virtually  any Internet  user.  The Company has developed its training
products to be deliverable via the Internet in real time,  using audio and video
streaming.  The Company will attempt to reach strategic relationships with major
Internet  companies  regarding the sales and delivery of Company products on the
Internet.  The content of the Company's  training  courses is something  that it
considers a valuable asset in the Internet marketplace.

     Increase  Direct  Corporate  Sales.   ViaGrafix  has  created  an  internal
corporate  sales  force  to  increase  direct  sales  to the  corporate  market.
Corporate sales  currently  account for a nominal portion of the Company's sales
and  represent an area of  potential  sales  growth for the  Company's  existing
product line. In addition to the Company's  expanded sales force, the Company is
also  adding  additional  features  to  its  training  products  focused  on the
corporate client.  The Company's  subscription  licensing model offers customers
access to its courses  using video,  CD,  client-server,  intranet,  or Internet
delivery.

     Increase  Sales  through  Major  Retailers.  The  Company's  sales to major
retailers have grown  significantly  in the past year and the Company expects to
be able  to  continue  growth  of such  sales.  The  Company  still  sells  to a
relatively  small  number of major  retailers,  which  leaves the Company with a
natural path for growth by adding more retail accounts

     Expand  Training  Product  Offerings.   ViaGrafix  has  created  a  product
development  system that  utilizes  development  technologies  and a streamlined
development  process  to reduce  development  time frame and cost.  The  Company
increased  its  development  staff in 1998 to  increase  the size of its product
offering and introduce  new training  products  earlier in the software  product
sales cycle. This increase in development staff will continue in 1999. ViaGrafix
began adding  courses on more  technical  material in 1998.  A training  library
containing  comprehensive training for MCSE, Oracle, SQL, and technical Internet
topics is appealing to many consumer and corporate clients.

     Expand Software  Product  Development.  The Company expects to successfully
market new "easy-to-use"  graphics software  utilizing its established  customer
base and sales  channel.  The Company has the ability to use its core  DesignCAD
technology  to produce  these new  products  at a lower  incremental  cost.  The
Company has new graphics  software  products  under current  development.  These
products will expand the Company's  software line into broader,  less  technical
areas. The Company also plans to create industry specific applications using the
DesignCAD engine.

     Increase  International  Sales. The Company intends to boost  international
sales and to continue a long-term  effort to translate  its products  into other
languages,  beginning with translations of its products into Spanish, German and
French.  International  sales  account for more than 50% of many major  software
companies' sales, but account for less than 10% of the Company's sales.

     Expand  Through  Acquisition.  The  Company may engage from time to time in
discussions  with  respect to  potential  acquisitions.  The  Company  will look
primarily for acquisitions that can offer additional  content,  additional sales
channels,  or technology.  The Company will consider its long-term prospects the
most important criteria.

<PAGE 6>

Products

     Technology-based  IT  Training  Products.  The Company  has  developed  and
markets more than 950 video and  multimedia  courses.  The  Company's  principal
educational products are training videos and multimedia courses teaching today's
most popular  software,  including  Microsoft  Windows,  Microsoft  Office,  the
Internet, Visual C++, Visual Basic, ACT!, Quicken,  PageMaker,  CorelDraw, Lotus
Notes, DesignCAD, and more.

     Each  application  above may have from one to thirteen  courses  associated
with it. For  example,  the  DesignCAD  Pro 2000  training  series  consists  of
"Learning  DesignCAD  Pro 2000,  Introduction,"  "Learning  DesignCAD  Pro 2000,
Advanced,"  and "Learning  DesignCAD Pro 2000,  Solid  Modeling."  There are six
courses for Microsoft Excel 97, 12 courses for Windows NT 4 Microsoft  Certified
Professional (Core), and five courses for Programming in Visual C++.

     Corporate training  departments and training companies commonly incorporate
training videos or multimedia courses into their existing training programs as a
supplemental way to meet varying learning  preferences of individuals.  Training
videos and multimedia  courses can also reduce training time and costs otherwise
incurred  through  seminars  and personal or  classroom  instruction  and enable
training to take place anytime or anywhere. The Company believes these tutorials
are an excellent way to increase employee productivity at minimal cost.

     Since  1996,  ViaGrafix  has  developed  its  multimedia-based  interactive
software  tutorials  to be  "networkable,"  which  allow  them to be  accessible
simultaneously  by multiple  users through LANs,  corporate  intranets,  and the
Internet.  Beginning  with  Microsoft  Office 97 tutorials,  an optional  "Skill
Development  Quiz"  concludes each chapter and a  comprehensive  test is offered
optionally at the end of each tutorial.

     ViaGrafix  training  products  are offered in three  configurations.  Video
tutorials  usually  run from 60 to 90 minutes in length  and are  packaged  in a
black plastic binder with printed  graphics.  Most have a suggested retail price
of  $49.95.  This line  includes  tutorials  for  beginners,  intermediate,  and
advanced users. A second configuration, "Teach Yourself" video tutorials, are 60
minutes or shorter in length, have less instructional  detail, are packaged in a
printed cardboard case, and have a suggested retail price of $19.95.  Multimedia
courses  are sold on  CD-ROM  in a  durable  clear  plastic  case  with  printed
graphics,  include  the full range of  instructional  titles from  beginners  to
advanced  users,  and  typically  have  a  suggested  retail  price  of  $49.95.
Multimedia  courses generally contain two to four hours of training.  Multimedia
courses are also offered on LANs, intranets, and the Internet. Pricing for these
delivery methods is based  on the number of titles and length of license period.

     Graphics  Software  Products.  The Company  develops  and  markets  several
graphics software packages. DesignCAD Pro 2000 is the latest CAD product offered
by the Company.  DesignCAD  Pro 2000,  with a retail price of $299,  offers true
solid modeling,  extensive dimensioning,  animation,  Internet capability,  file
compatibility with all the major file types, and object linking and embedding.

     The  Company  introduced  a line  of  graphics  software  products  for the
consumer  market in late  1998.  ViaDraw,  a  general-purpose  graphics  package
released in November 1998, is the Company's first entry in this line.  ViaCAD, a
low cost CAD package,  was  released in the first  quarter of 1999.  ViaPage,  a
web-page editor, is currently under development and scheduled for release in the
second  quarter of 1999.  All of these new products are  targeting  the consumer
marketplace via retail stores and Internet commerce at a price point of $40-60.

     Internet  Marketing  Products  and  Services.  The  Company's  wholly owned
subsidiary,  Make  It So,  provides  Internet  direct  marketing  services  with
broadcast  e-mail for  businesses,  and it offers a membership  in ClubMail,  an
online community of over 450,000 members. ClubMail members can purchase products
at a discount from advertised retail prices.

<PAGE 7>

Product Development

     Since inception,  the Company has made  substantial  investments in product
research and development.  During 1998, 1997 and 1996,  research and development
expenses  were   approximately   $1.7   million,   $1.2  million  and  $467,000,
respectively.  As of December 31, 1998, the Company had 62 employees  engaged in
research and development.  Substantially  all of the Company's  product research
and development activities take place in its Pryor, Oklahoma facility.

Sales and Marketing

     The Company sells and markets its technology-based IT training products and
graphics  software  products  directly and through  resellers and  distributors.
During 1998,  the Company  achieved  approximately  29% of its revenues  through
direct  sales  and  approximately  71% of its  revenues  through  resellers  and
distributors.

     The Company relies heavily upon sales to Ingram Micro, Inc.  ("Ingram"),  a
major  distributor that supplies  computer-related  products to other resellers,
including some major retailers.  Sales to Ingram accounted for approximately 29%
of the Company's  1998  revenues.  The Company also relies heavily upon sales to
certain  retailers,  including  Best Buy  Company,  Inc.,  CompUSA  Inc.,  Fry's
Electronics,  Inc.,  Hastings  Entertainment,  Inc., Micro Center (trade name of
Micro  Electronics,  Inc.) and Office Max, Inc. Direct and indirect sales to the
Company's  six top retailers  accounted  for 33% of the Company's  1998 revenues
[indirect  sales of the  Company's  products  are  supplied  to these  retailers
through distributors such as Ingram or Tech Data Corporation ("Tech Data")]. The
Company is currently investing,  and intends to continue to invest,  significant
resources to develop these channels.

     The Company expects to utilize the increasing  influence of the Internet by
relying heavily upon sales to certain Internet commerce partners.  Subsequent to
December 31, 1998 the Company's training products were made available by America
On Line, Inc. ("AOL") to its subscribers on the AOL service.

     Of the  Company's  sales  in  1998,  1997  and  1996,  83%,  81%  and  69%,
respectively,  were of the  Company's  training  products  and 13%, 19% and 31%,
respectively,  were of the Company's software products. The Company acquired the
assets of Make It So, Inc. on July 31, 1998, and for the last five months of the
year the  subsidiary  generated  approximately  4% of the  Company's  total 1998
sales.

Customers (End-Users)

     The Company's  training  products are used to educate  people in the use of
software.  The Company estimates that about two-thirds of its training customers
use the products for work-related activities, and one-third use the products for
personal  improvement.  The Company  estimates that about one-third of DesignCAD
users  are  professional   engineers  and  about  one-third  use  DesignCAD  for
architectural and building  applications.  The remaining customers use DesignCAD
for a wide  variety  of  purposes,  such  as  facilities  management,  technical
illustration and casual drawing.

     The  Company has an  extensive  and diverse  list of  end-users,  including
thousands  of  users  from  various  industries  including   telecommunications,
technology,  oil  and  gas,  healthcare,   insurance,  government,  finance  and
education.

Customer Support

     The Company  believes that its ability to provide quality  customer service
and support to its distributors  and its end-user  customers is essential to the
continued acceptance of its products.  The Company has a 60-day return policy on
all  products  and  offers  extended  terms and  return  policies  to some major
retailers and  distributors.  The  Company's  customer  support  services are as
follows:

     Technical Support.  The Company's technical staff provides telephone,  fax,
mail and e-mail  support to the entire  customer  base.  In addition,  qualified
developers  and  partners  who work closely  with the  Company's  products  have
extended access to the Company's Internet support site, which contains technical
updates and technical maintenance files.

<PAGE 8>

     Customer Service.  The Company's customer service staff provides processing
and shipping information on current and future orders. These personnel also deal
with any customer inquiries involving delivery, availability,  priority handling
and replacement products.

Production and Suppliers

     The majority of the production of the Company's products takes place at its
Pryor, Oklahoma facility. This primarily includes duplicating and packaging.

     Inventories  of finished goods are generally kept at levels equal to one to
six weeks of orders. The principal physical components of the Company's products
are diskettes,  CD-ROMs,  videotapes,  printed material and manuals. The Company
keeps  significant  inventories  of these raw  materials  in order to meet rapid
delivery  requirements  of its  customers.  The  materials  that  make up  these
principal  physical  components of the Company's  products are available  from a
number of suppliers.  The Company has not experienced any material  difficulties
or delays in the  manufacture  and assembly of its products or material  returns
due to product defects or product availability.

Intellectual Property Rights

     The Company regards certain features of its internal  operations,  software
and  documentation  as its  intellectual  property.  The Company  believes that,
because  of the rapid  pace of  technological  change in the  computer  software
industry,  trade  secret and  copyright  protection  are less  significant  than
factors  such  as  the  knowledge,  ability  and  experience  of  the  Company's
employees,  frequent  product  enhancements  and the  timeliness  and quality of
support  services.  The Company relies on a combination of contract,  copyright,
trademark and trade secret laws and other  measures to protect its  intellectual
property. The Company has no patents. The Company licenses its software products
primarily  under  "shrink-wrap"  licenses that are not signed by its  licensees.
These  shrink-wrap  licenses  may be  unenforceable  under  the laws of  certain
jurisdictions.

     The Company  provides its products to customers on a  "right-to-use"  basis
under  non-exclusive  licenses,  which generally are  nontransferable and have a
perpetual  term.  The Company  typically  licenses its  products  solely for the
customer's internal operations.

Competition

     The market for  technology-based IT training products and graphics software
products  is  highly  competitive  and is  characterized  by  rapid  changes  in
technology and frequent introductions of new platforms and features. The Company
expects competition to increase as other companies introduce additional and more
competitive  products in these  markets.  In its video  training  business,  the
Company  competes  primarily  with a number of small private  companies.  In its
multimedia training business,  the Company competes directly against a number of
small private  companies,  and indirectly with a number of large  computer-based
training  vendors,  most of whom are expected to enter the  multimedia  training
business.  Some of these  computer-based  training  vendors,  such as CBT Group,
P.L.C.,  and National  Educational  Training Group,  Inc., have larger technical
staffs,  greater brand  recognition and market  presence,  more  established and
larger marketing and sales  organizations  and  substantially  greater financial
resources than the Company.

     Some of the Company's competitors in the graphics software business such as
Autodesk,  Inc., Visio Corporation,  and International  Microcomputer  Software,
Inc.  have  larger  technical  staffs,  greater  brand  recognition  and  market
presence,  more  established and larger  marketing and sales  organizations  and
substantially greater financial resources than the Company.

     The Company believes that the competitive  factors affecting the market for
the Company's products include product performance,  price and quality;  product
functionality and features; the availability of products for existing and future
platforms;  the ease of use and ease of  integration  of the products with other
hardware and software components; and the quality of customer support services.

<PAGE 9>

     The Company's present or future competitors may be able to deliver products
comparable  or  superior to those  offered by the Company or adapt more  quickly
than the Company to new technologies or evolving customer requirements. In order
to remain successful in the software  products market,  the Company must respond
to  technological   change,   customer  requirements  and  competitors'  current
products,  product enhancements and innovations.  In particular, in an effort to
respond to customer  feedback  and new  technological  advances,  the Company is
currently  developing  additional  products and  enhancements for its multimedia
training  product  line  that is  deliverable  via  CD-ROM,  LAN,  intranet,  or
Internet.

Backlog and Seasonality

     The  Company  typically  ships its  products  within a short  period  after
acceptance of orders from  distributors  and other customers.  Accordingly,  the
Company  typically does not have a material  backlog of unfilled  orders and net
sales in any  quarter  are  substantially  dependent  on  orders  booked in that
quarter.

     The  Company's  business  has been  affected  somewhat by seasonal  trends,
including  higher net  revenues  in the fiscal  quarter  ended  December 31 as a
result  of  strong  calendar  year-end  holiday  purchases  by end  users of its
products.  As a result,  the Company may  experience  lower net  revenues in the
fiscal  quarters  ended  March 31,  June 30 and  September  30.  These  seasonal
patterns may be overshadowed in particular quarters by the timing of new product
introductions,  expansion  into new  markets  and other  factors  affecting  the
Company's business.

Employees

     As of  December  31,  1998,  the  Company  had a  total  of 216  employees,
including  58  employees  in sales,  marketing,  technical  support and customer
service,  62 employees in research and  development,  46 employees in production
and product handling,  39 employees in administration  and support roles, and 11
employees employed by Make It So. The Company has allocated  approximately 8,000
square feet of its facilities to  recreational,  physical fitness and child-care
facilities  for, and offers  flexible work  schedules to, many of its employees.
None of the Company's  employees are  represented  by a labor union.  Management
believes that the Company's relations with its employees are good.


Item 2. Properties

     The Company's administrative, marketing, production and product development
facilities consist of approximately 68,000 square feet at one location in Pryor,
Oklahoma. The Company owns and occupies this facility and the five acres of land
on which it is located. In December 1998 the Company purchased an additional ten
acres of land in Pryor,  Oklahoma for expansion of its facilities and expects to
begin construction in the first quarter of 1999.


Item 3. Legal Proceedings

     On May 22, 1998 a lawsuit was filed in the United States District Court for
the  Northern  District of Texas by Jonathan  L.  Gordon,  brought as a putative
class  action  against the Company and  certain of its  officers  and  directors
claiming violations of the Securities Act of 1933 for alleged misrepresentations
and omissions in the Company's  Prospectus issued in connection with its initial
public  offering made in March 1998.  Mr. Gordon and certain  others have sought
designation as lead plaintiffs in the action.  The Company  believes the lawsuit
is without merit. The Company's response is not yet due.

     From time to time,  the Company is involved  in  litigation  arising out of
operations in the normal course of business, none of which is expected to have a
material  adverse  effect on the  Company's  results of  operations or financial
position.

<PAGE 10>

Item 4. Submission of Matters to a Vote of Security Holder

     No matter was submitted to a vote of security holders, through solicitation
of  proxies  or  otherwise,  during the  period  from  October 1, 1998,  through
December 31, 1998.


PART II.

Item 5. Market for Registrant's Common Stock and Related Stockholder Matters

     The  Company's  Common  Stock  trades on The Nasdaq  Stock Market under the
symbol  "VIAX".  The range of sales prices for the Company's  Common Stock since
the Company's  initial public  offering on March 4, 1998 as reported by National
Association of Securities Dealers, Inc., was as follows:

Quarter Ended                 High Bid           Low Bid
-------------                 --------           -------
March 31, 1998                  $15.25            $11.75
June 30, 1998                   $16.00             $5.25
September 30, 1998               $8.13             $4.63
December 31, 1998                $7.50             $2.53


Item 6. Selected Financial Data

The following  selected  financial data should be read in  conjunction  with the
financial statements and related notes thereto for the periods indicated,  which
are included elsewhere in this report.

<TABLE>

                                                                        Years Ended December 31,
                                                   ---------------------------------------------------------------
                                                   -----------  ------------  -----------   ----------  ----------
                                                      1998         1997          1996       1995 (1)      1994
                                                   -----------  ------------  -----------   ----------  ----------
Statement of Operations Data (2):                               (In thousands, except per share data)
<CAPTION>
<S>                                                  <C>           <C>          <C>           <C>         <C>    
Net Sales                                            $ 18,750      $ 13,695     $ 10,077      $ 7,230     $ 4,884
Gross Profit                                           14,205        10,652        7,463        4,984       3,204
Operating Expenses:
     Selling, general and administrative                6,212         4,120        3,704        2,828       1,462
     Advertising                                        4,443         1,961        1,207        1,062         208   
     Research and development                           1,697         1,162          467          320         207
     Purchased research and development (3)                 -             -            -        1,397           -
     Depreciation and amortization                        734           319          685          433          54            
                                                     --------      --------     --------     --------    --------
Operating profit (loss)                                 1,119         3,090        1,400       (1,056)      1,273
Net interest income (expense)                             481          (251)        (262)        (109)          3
                                                     --------      --------     --------     --------    --------
Income (loss) before income taxes                       1,600         2,839        1,138       (1,165)      1,276
Net Income (loss)                                      $1,246        $2,023        $ 675       $ (707)    $ 1,039
                                                   ===========  ============  ===========   ==========  ==========
Diluted earnings per share (4)                         $ 0.21        $ 0.45       $ 0.15      $ (0.21)      $0.24
                                                   ===========  ============  ===========   ==========  ==========
Diluted weighted average shares (4)                     5,842         4,498        4,405        3,503       4,286
                                               
Pro Forma Data:
Pro forma net income (loss) (5)                        $1,246        $2,023        $ 675       $ (707)      $ 791
                                                   ===========  ============  ===========   ==========  ==========
Pro forma net income (loss) per diluted
     common share (4) (5)                              $ 0.21        $ 0.45       $ 0.15      $ (0.21)     $ 0.18
                                                   ===========  ============  ===========   ==========  ==========
<PAGE 11>

Balance Sheet Data:
Cash, cash equivalents and short-term investments    $ 13,046         $ 218       $1,009         $ 35       $ 389
Working capital                                        18,066         2,324        1,637          676         872
Total assets                                           25,216         7,419        6,112        5,283       1,302
Long-term debt                                              -         2,827        3,482        3,478           -
Total shareholders' equity                             22,834         2,513          937          243         979
Dividends per common share equivalent                       -         $0.12            -        $0.05           -

Supplemental Data:
Number of training courses offered                        950           670          460          335         230
</TABLE>

(1)  The operating  results of ASBC are included in the statements of operations
     from  the  August  15,  1995  acquisition  date  forward.
(2)  Cooperative  advertising  expense and  certain  staff  expenses  previously
     reported in cost of sales have been reclassified to advertising expense and
     to selling,  general, and administrative  expense.  Prior periods have been
     reclassified for consistency.
(3)  The Company  incurred a one-time  charge in 1995 to write off the  acquired
     in-process research and development related to the acquisition of ASBC.
(4)  Shares have been adjusted in 1997-1994 for a 1 for 1.75 reverse stock split
     on December 12, 1997.
(5)  Includes a pro forma tax  provision,  as the Company  was an S  corporation
     from January 1 to August 16, 1994.


Item 7. Management's  Discussion and Analysis of Financial Condition and Results
of Operations

     The  following  discussion  of  the  financial  condition  and  results  of
operations  of the  Company  should be read in  conjunction  with the  Company's
Consolidated  Financial  Statements  and Notes,  presented  on pages F-1 through
F-25, and the other financial information included elsewhere in this Form 10-K.


RESULTS OF OPERATIONS

     The  following  table  sets  forth,  for  the  periods  indicated,  certain
financial data expressed in percentages:

<TABLE>

                                                                    Year Ended December 31,
                                                    --------------------------------------------------
                                                            1998             1997            1996
                                                            ----             ----            ----
<CAPTION>
<S>                                                        <C>              <C>             <C>    
Net sales                                                  100.0 %          100.0 %         100.0 %
                                                           
Cost of sales                                               24.2             22.2            25.9
                                                            
Gross profit                                                75.8             77.8            74.1
                                                            
Selling, general and administrative                         33.1             30.1            36.8
                                                            
Advertising                                                 23.7             14.3            12.0
                                                            
Research & development                                       9.1              8.5             4.6
                                                             
Depreciation & amortization                                  3.9              2.3             6.8
                                                             
Operating profit                                             6.0             22.6            13.9
                                                             
Net interest income (expense)                                2.6             (1.8)           (2.6)
                                                             
Income before income taxes                                   8.5             20.7            11.3
                                                             
Net income                                                   6.6             14.8             6.7
</TABLE>
                                                             
<PAGE 12>

1998 COMPARED WITH 1997

     Net Sales.  Net sales  increased  37% to $18.8  million  for the year ended
December 31,  1998,  compared to $13.7  million for the year ended  December 31,
1997.  This increase in sales  results  primarily  from existing and  additional
training  products,  along with sales of  approximately  $826,000 or 4% of total
1998 sales,  from the Company's  subsidiary,  Make It So, Inc. for the last five
months of 1998. IT training  product sales for the year ended  December 31, 1998
increased 40% to approximately $15.5 million, or 83% of total sales, compared to
approximately  $11.1 million,  or 81% of total sales, in 1997. This increase was
primarily  attributable  to increases in the volume of products sold rather than
increases in prices.  Graphics  software  sales for the year ended  December 31,
1998,  decreased  8.5% to  approximately  $2.4  million,  or 13% of total sales,
compared to  approximately  $2.6 million,  or 19% of total sales,  in 1997. This
decrease  was  primarily  due to lower  than  expected  sales  of the  Company's
DesignCAD upgrade, DesignCAD Pro 2000, that was introduced in late August 1998.

     Cost of Sales.  Cost of sales  increased  49% to $4.5  million for the year
ended  December 31, 1998,  compared to $3.0 million in 1997.  Cost of sales as a
percentage  of total sales  increased  to 24.2% for the year ended  December 31,
1998,  from 22.2% for 1997.  The increase in cost of sales as a percent of sales
was a result of increased sales to major retailers of lower margin products.  In
addition,  there was a higher cost of sales percentage  (43.2%) from Make It So,
Inc. that affected the Company's sales mix during the last five months of 1998.

     The  classification  of  certain  expenses  on the  Company's  Consolidated
Statements of Income has been changed in 1998.  Cooperative  advertising expense
and  certain  staff  expenses  previously  reported  in cost of sales  have been
reclassified to advertising expense and to selling,  general, and administrative
expense. Prior periods have been reclassified for consistency.

     Selling,   General  and  Administrative  Expense.   Selling,   general  and
administrative expense increased 51% to $6.2 million for the year ended December
31, 1998, compared to $4.1 million in 1997. Selling,  general and administrative
expenses as a  percentage  of total sales  increased to 33.1% for the year ended
December 31, 1998,  from 30.1% for 1997.  The increase was primarily a result of
increased  staffing  and  commission   expenditures.   Staffing  and  commission
expenditures  increased 53% to $4.2 million in the year ended  December 31, 1998
from $2.7 million in 1997.  Increased  commission  expenditures were a result of
increased  sales.  Staffing  increased  during  the year to 216  employees  (154
non-R&D) as of December  31, 1998  compared to 145  employees  (101  non-R&D) on
December 31,  1997.  The Company  believes  these staff  additions  will provide
support for  increased  future sales.  The largest  employee  increases  were in
marketing and sales teams. The Company is building an  infrastructure to support
its corporate  sales efforts,  and increased its corporate  sales staff from two
people to 14 people during 1998. The balance of the increased  selling,  general
and  administrative  expenditures  during  1998 were  primarily  to service  the
planned increased staffing and facilities.

     Advertising Expense.  Advertising expense increased 127% to $4.4 million in
the year ended December 31, 1998 from $2.0 million in 1997.  Advertising expense
as a percentage  of total sales  increased to 23.7% for the year ended  December
31,  1998,  from  14.3%  in  1997.  Advertising  expenses  are  for  cooperative
advertising,   advertising   through  the  channels  of   distribution,   direct
advertising, and print media advertising.

     Research  and  Development   Expense.   Research  and  development  expense
increased  46% to $1.7 million for the year ended  December 31, 1998 compared to
$1.2 million in 1997.  Research and  development  expense as a percentage of net
sales increased to 9.1% for the year ended December 31, 1998, from 8.5% in 1997.
This  increase  reflects  the  Company's  commitment  to expand its number of IT
training courses  offered,  as it released 280 new  computer-training  titles in
1998.  Included  in the  research  and  development  expense  for 1998 are costs
associated  with the  initiation  of the  development  of training  libraries in
Spanish,  French and German.  The Company expects to have completed a library of
core  titles in  Spanish to market  through  international  distributors  by the
second  quarter  of 1999.  A library  of core  titles in  German  and  French is
expected later in 1999. The Company released DesignCAD Pro 2000 during the third
quarter,  and  DesignCAD  LT 2000 in the fourth  quarter of 1998.  ViaDraw,  the
Company's first entry in a line of graphics  software  products for the consumer
market,  was released in late November 1998. Two  additional  graphics  software
products for the consumer market,  ViaCAD, a low cost CAD package,  was released
in the first quarter of 1999, and ViaPage, a web-page editor, is scheduled to be
released in the second quarter of 1999.  Research and  development  expenditures
also  included  development  efforts on the  Company's  web site and on Internet
online delivery of training.  The Company  continued to increase its development
staff  during 1998 and as of December  31, 1998 had 62 employees in research and
development  compared to 44 on December  31,  1997.  The Company  believes  that
significant  investment  in  research  and  development  is  required  to remain
competitive  in its markets and,  therefore,  expects  research and  development
expense to continue to increase in future periods.

<PAGE 13>

     Depreciation  and  Amortization  Expense.   Depreciation  and  amortization
expense increased 130% to approximately  $734,000 during the year ended December
31, 1998 from approximately $319,000 during 1997.  Depreciation and amortization
expense as a percentage of sales  increased to 3.9% for the year ended  December
31, 1998  compared to 2.3% in 1997. In 1998  depreciation  and  amortization  of
approximately $219,000 was attributable to the assets purchased on July 31, 1998
from Make It So, Inc. The majority of the assets purchased from Make It So, Inc.
have  depreciable  lives of 12 to 18 months.  The  remainder  of the increase in
depreciation  and  amortization  expenses in 1998 was primarily  attributable to
asset  additions  during the year for expansion of  facilities,  production  and
duplication  equipment  and  computer  hardware.  During the fourth  quarter the
Company recognized approximately $78,000 in amortization of prepaid royalties to
7th Street.com, Inc., formerly Street Technologies, Inc.

     Net  Interest  Income  (Expense).  Net  interest  income was  approximately
$481,000 or 2.6% of sales for the year ended  December 31, 1998  compared to net
interest expense of  approximately  $252,000 or 1.8% of sales in 1997. A portion
of the net proceeds from the Company's  initial public offering on March 4, 1998
was used to retire  all  outstanding  long-term  debt,  which  lowered  interest
expense to  approximately  $54,000 for the year ended December 31, 1998 compared
to approximately  $272,000 in interest expense in 1997. A significant portion of
the net proceeds from the initial public  offering was invested in highly liquid
investments with maturities of six months or less. These  investments  generated
interest income of  approximately  $535,000 for the year ended December 31, 1998
compared to interest income of approximately $21,000 in 1997.

     Income Taxes.  In the year ended  December 31, 1998, the effective tax rate
improved to 22% compared to 29% in 1997. The reduction in the effective tax rate
was  due  to  several  factors,   including  the  realization  of  research  and
development  tax credits for 1995 through 1998. The amount of available  credits
for 1995  through  1997 was  quantified  and the  benefit  recorded in the first
quarter of 1998. During 1998 approximately  $383,000 of the $535,000 of interest
income was  derived  from  federal  tax exempt  investments,  while there was no
interest income in 1997 derived from federal tax exempt investments.


1997 COMPARED WITH 1996

     Net Sales.  Net sales  increased  36% to $13.7  million  for the year ended
December 31,  1997,  compared to $10.1  million for the year ended  December 31,
1996.  This increase  reflects an increase in sales  primarily from existing and
additional  training  products.  IT  training  product  sales for the year ended
December 31, 1997 increased 60% to approximately  $11.1 million, or 81% of total
sales,  compared to approximately $7.0 million,  or 69% of total sales, in 1996.
This increase was primarily  attributable to increases in the volume of products
sold rather than increases in prices. Graphics software sales for the year ended
December 31, 1997,  decreased 17% to approximately $2.6 million, or 19% of total
sales,  compared to approximately $3.1 million,  or 31% of total sales, in 1996.
This  decrease was  primarily  due to stronger  sales of DesignCAD  upgrades for
Windows 95 in 1996.

<PAGE 14>

     Cost of Sales.  Cost of sales  increased  16% to $3.0  million for the year
ended  December 31, 1997,  compared to $2.6 million in 1996.  Cost of sales as a
percentage  of total sales  decreased  to 22.2% for the year ended  December 31,
1997,  from 25.9% for 1996.  The  decline in cost of sales as a percent of sales
was a result of  productivity  improvements  due to  economies of scale as sales
increases  were covered with a minimal  increase in  duplicating  and  packaging
personnel.

     Selling,   General  and  Administrative  Expense.   Selling,   general  and
administrative  expense  increased  11% to $4.1  million  during  the year ended
December  31,  1997,  compared  to $3.7  million in 1996.  Selling,  general and
administrative expense as a percentage of total sales decreased to 30.1% for the
year ended  December 31, 1997,  from 36.8% in 1996, due largely to the Company's
ability to control its growth in payroll and trade show expenses.

     Advertising  Expense.  Advertising  expense  increased  62% to $2.0 million
during the year ended  December  31,  1997,  compared  to $1.2  million in 1996.
Advertising  expense as a percentage  of total sales  increased to 14.3% for the
year ended December 31, 1997, from 12.0% in 1996.  Advertising  expenses are for
cooperative  advertising,  advertising  through the  channels  of  distribution,
direct advertising, and print media advertising.

     Research  and  Development   Expense.   Research  and  development  expense
increased 149% to $1.2 million during the year ended December 31, 1997, compared
to  approximately  $467,000  in 1996.  Research  and  development  expenses as a
percentage  of total sales  increased  to 8.5% for the year ended  December  31,
1997, from 4.6% in 1996.  This higher level of research and development  expense
reflects an overall increase in personnel for product development.

     Depreciation  and  Amortization  Expense.   Depreciation  and  amortization
expense decreased from approximately $685,000 during the year ended December 31,
1996, to  approximately  $319,000 in 1997.  Depreciation  and  amortization as a
percentage of sales decreased from 6.8% for the year ended December 31, 1996, to
2.3%  in  1997.  This  reduction  was  due  mostly  to  the  conclusion  of  the
amortization  period for purchased ASBC  software,  which was only $5,500 in the
year ended December 31, 1997, versus approximately $322,000 during 1996.

     Income Taxes.  In the year ended  December 31, 1997, the effective tax rate
improved to 29% compared to 41% in 1996. The reduction in the effective tax rate
was due to the  realization of tax credits from 1994 through 1997 resulting from
the passage of the Taxpayer Relief Act of 1997 in August,  1997, which clarified
that  companies  employing  enrolled  members of Indian Tribes within  specified
portions of the State of  Oklahoma  are  eligible  to receive a tax credit.  The
credits are based upon a percentage  of the increase in qualified  wages paid to
qualified  members  of Indian  Tribes.  The  amount  of  available  credits  was
quantified and the benefit recorded in the fourth quarter of 1997.


LIQUIDITY AND FINANCIAL CONDITION

     The Company's cash, cash  equivalents  and short term  investments  totaled
approximately  $13.0  million at December  31,  1998.  Following  the  Company's
initial public offering on March 4, 1998, the Company realized net proceeds from
the offering of approximately $20.5 million.  Long-term debt of $3.7 million was
retired  after the Company  received the offering  proceeds.  The Company has no
long-term debt as of December 31, 1998.

     The Company  believes that its cash and short-term  investment  balances at
December 31, 1998 and cash  generated  from future  operations  will satisfy its
anticipated  needs  for  working  capital  and  capital   expenditures  for  the
foreseeable future. However, the Company could need additional funds in order to
fund  business  expansion,   develop  new  or  enhanced  products,   respond  to
competitive   pressures  or  acquire  complementary   products,   businesses  or
technologies.   In  the  normal  course  of  business,   the  Company  evaluates
acquisitions of businesses,  product lines and technologies  that complement the
Company's business, like the Make It So, Inc. acquisition.

<PAGE 15>

     During the year ended December 31, 1998 the Company's operating  activities
generated net cash of approximately $58,000. Operating activities generated cash
flows  through  approximately  $1.2  million  in net  income,  $1.2  million  in
increases  in  accounts  payable  and  accrued  liabilities,  and  approximately
$734,000 in depreciation and amortization. Non-cash items, including an increase
in the deferred  income tax provision,  bad debt expense,  a loss on disposal of
assets and  interest  expense  generated  cash flow of  approximately  $291,000.
During 1998 the most significant use of cash by operating  activities was from a
$2.4 million increase in trade accounts  receivable.  Trade accounts  receivable
increased  $1.0 million  during the fourth  quarter  primarily  due to increased
sales to major retailers,  including the Company's largest shipment ever of $1.4
million to CompUSA through the Company's  largest customer,  distributor  Ingram
Micro.  Cash  flow  used in  operating  activities  during  1998  also  included
increased inventories of approximately $497,000, increased income tax receivable
and prepaid expenses of approximately  $408,000, and a reduction in income taxes
payable of approximately $209,000.

     The Company's  capital  expenditures  during 1998 were  approximately  $1.1
million.  Capital  expenditures  were  primarily  for  expansion of  facilities,
production and duplication equipment and computer hardware. On July 31, 1998 the
Company purchased the assets of Make It So, Inc., a California corporation,  for
approximately   $682,000  (including   approximately  $665,000  in  capital  and
intangible assets), and subsequently  contributed those assets to a newly formed
Oklahoma subsidiary, Make It So, Inc. On September 30, 1998 the Company executed
a $620,000  Development and Licensing  Agreement with 7th  Street.com,  Inc. The
President and Chief Executive  Officer of 7th Street.com,  Inc. is a director of
the Company. The Company loaned approximately $188,000 to its Vice President and
Chief Marketing Officer in July 1998 as a part of an employment  agreement.  The
loan is secured by a first  mortgage on his  residence,  at a rate of 8%, and is
being repaid monthly with a balloon payment due at the end of two years.

     In  December  1998  the  Company  purchased  land in  Pryor,  Oklahoma  for
expansion of its facilities for $115,000,  and to accommodate the seller, agreed
to finance $103,500 of the purchase price at 5% interest until June 1, 1999. The
Company expects to begin  construction in the first quarter of 1999. The Company
does  not  currently  have  any  other   significant   commitments  for  capital
expenditures.  The  Company  anticipates  that it will  continue  to expand  its
facilities and purchase  equipment as needed to support its product research and
development,  production of its products, sales and marketing,  product support,
and administrative staff.

     The Company  announced on September 1, 1998 that its Board of Directors had
authorized  the  repurchase  of up to $3  million  of its  common  stock.  As of
December 31, 1998 the Company had repurchased  278,900 shares, for approximately
$1.5 million.


YEAR 2000 DISCLOSURE

     The Year 2000 issue is the result of computer  programs being written using
two  digits  rather  than four to define  the  applicable  year.  The  Company's
computer  equipment and software and devices with embedded  technology  that are
time-sensitive  may recognize a date using "00" as the year 1900 rather than the
year 2000.  This could  result in a system  failure or  miscalculations  causing
disruptions of operations,  including, among other things, a temporary inability
to process  transactions,  send invoices,  or engage in similar normal  business
activities.

     The Company uses up-to-date,  PC-based software for its internal accounting
and other  applications.  The  Company  has  completed  testing of its  internal
accounting  and  other  significant  applications  and has  found  no Year  2000
defects.  The Company has checked its training  products  and graphics  software
products for Year 2000 defects and has found none.

     The Company may  encounter  some Year 2000  defects in the software it uses
internally, but believes that these can be resolved as they are encountered. The
Company does not intend to do further  testing of its internal  systems for Year
2000  defects.  The Company has no  contingency  plans  related to the Year 2000
issue.

<PAGE 16>

     The Company  could  encounter  some Year 2000  defects in the  products and
services it produces  and markets.  The Company  intends to continue to evaluate
its products and services to ensure they perform  correctly in the year 2000. If
Year 2000 defects are  encountered,  the Company could be liable for substantial
legal claims and  litigation,  and the adverse  publicity  could have a material
adverse effect on the future sales of the Company's products and services,  even
after any Year 2000 defects are resolved.  However,  any material adverse effect
on the Company's  financial  position and results of  operations  and cash flows
cannot be currently estimated.

     The  Company  relies  on  outside  suppliers  for  raw  materials,  outside
distributors for its finished products,  financial institutions for its banking,
and a number of other third parties in its normal business operations.  If these
third-party suppliers and service providers have substantial Year 2000 problems,
it could have a material adverse effect on the Company's  business.  The Company
is not  requiring  its  suppliers  and service  providers  to provide  Year 2000
readiness information.
         
     The Company has not incurred  and does not  anticipate  incurring  material
costs in addressing Year 2000 issues.

     The Company believes its largest risk regarding the Year 2000 issue is from
legal  claims and  litigation.  The Company  expects  that there will be a large
number of lawsuits  filed over Year 2000 issues in the United States  because of
the great  publicity  of the Year 2000  issue.  Even  small  Year 2000  problems
encountered by the Company could result in substantial  legal claims,  lawsuits,
and class  action  lawsuits  against  the  Company,  which in turn  could have a
material adverse effect in the Company's financial position.

Future performance and additional Risk Factors

Dependence on New Products; Rapid Technological Change; Product Development Risk

     The  market  for  the  Company's   products  is   characterized   by  rapid
technological  advances and evolving industry standards and can be significantly
affected by new product introductions, changing customer requirements and market
activities of industry  participants.  The life cycles of the Company's products
are difficult to estimate and the Company's position in the current market could
be undermined  by rapid product  advances.  The  Company's  future  success will
depend upon its ability to continue  to improve  existing  product  lines and to
develop and introduce  products with new or enhanced  capabilities  that address
the  increasingly  sophisticated  needs  of its  customers  and keep  pace  with
technological and competitive developments. Among other things, the emergence of
the Internet as an alternative  computing  platform and distribution  medium may
adversely affect the demand for single-user  products and alter current software
utilization,  distribution and pricing patterns.  There can be no assurance that
the  Company  will be able to  successfully  develop  and market new or enhanced
products  or  respond  effectively  to  technological  changes  or  new  product
announcements  by others.  Any failure by the Company to  anticipate  or respond
adequately  to  technological  developments  and customer  requirements,  or any
significant  delays in product  development or  introduction,  could result in a
loss of competitiveness and revenue.

     Delays in the  release of new and  upgraded  versions of the  Company's  IT
training  products and graphics  software  products  could have a  significantly
negative impact on the Company's sales and results of operations. Because of the
complexities  inherent in developing software products as sophisticated as those
sold by the  Company  and the  lengthy  testing  periods  associated  with  such
products,  no assurance can be given that future  product  introductions  by the
Company will not be delayed. In addition,  complex software programs may contain
undetected  errors or "bugs" when they are first  introduced  or as new versions
are  released.  There can be no  assurance  that errors will not be found in the
Company's existing or future products,  with the possible result of delays in or
loss  of  market  acceptance  of  these  products,  diversion  of the  Company's
resources, injury to the Company's reputation and increased service and warranty
expenses.

<PAGE 17>

Reliance on a Major Distributor

     The  Company  relies  heavily  upon sales to  Ingram,  a  distributor  that
supplies  resellers,  including some major retailers.  Sales to Ingram accounted
for approximately  29% of the Company's 1998 revenues,  approximately 17% of the
Company's 1997 revenues,  and were less than 10% of the Company's 1996 revenues.
The  Company's   unwritten  agreement  with  Ingram  does  not  require  minimum
purchases, is not exclusive and may be terminated by either party without cause.
There can be no  assurance  that  Ingram  will  actively  market  the  Company's
products or will maintain its  relationships  with the Company.  Any loss of, or
material  decrease  in, the business  from Ingram could have a material  adverse
effect on the Company's business, financial condition and results of operations.
[See Note 10 of Notes to Financial Statements.]


Reliance on Major Retailers

     The  Company  relies  heavily  upon  sales  to  certain  retail  customers,
including  Best Buy  Company,  Inc.,  CompUSA  Inc.,  Fry's  Electronics,  Inc.,
Hastings  Entertainment,  Inc.,  Micro Center (trade name of Micro  Electronics,
Inc.) and Office Max,  Inc.  Direct and indirect  sales to the Company's six top
retail  customers  accounted  for 33% of the Company's  1998 revenues  (indirect
sales  of the  Company's  products  are  supplied  to  these  retailers  through
distributors  such as Ingram or Tech  Data).  The  Company's  ability to achieve
significant  revenue  growth in the  future  will  depend in part on adding  new
retail  accounts  and  leveraging  its  relationships   with  existing  retailer
customers.  The  Company is  currently  investing,  and  intends to  continue to
invest,  significant  resources  to  develop  these  channels.  There  can be no
assurance that the Company will be able to leverage  relationships with existing
retail  accounts  and  add  new  retailers  to  market  the  Company's  products
effectively.  The inability to do so could have a material adverse effect on the
Company's business,  results of operations and financial condition. [See Note 10
of Notes to Financial Statements.]

Reliance on Internet Commerce Partners

     The Company expects to utilize the increasing  influence of the Internet by
relying heavily upon sales to certain Internet commerce partners.  The Company's
ability to achieve  significant revenue growth in the future will depend in part
on adding Internet  commerce  partners along with  leveraging its  relationships
with those  partners.  Subsequent  to December 31, 1998 the  Company's  training
products were made available by AOL to its  subscribers on the AOL service.  The
Company is currently investing,  and intends to continue to invest,  significant
resources to develop this  channel.  There can be no assurance  that the Company
will be able to add new Internet  commerce  partners,  retain those  partners or
leverage its relationships with Internet commerce partners.  The inability to do
so could have a material  adverse effect on the Company's  business,  results of
operations and financial condition.


Dependence on Resellers

     The  Company  distributes  its  products  primarily  through a  network  of
dealers,  retailers and other resellers.  Accordingly,  the Company is dependent
upon these resellers to assist in promoting  market  acceptance of its products.
There can be no assurance that these dealers, retailers and other resellers will
devote the resources  necessary to provide effective sales and marketing support
to the Company.  The Company's  dealers,  retailers and other  resellers are not
generally  contractually  committed to make future  purchases  of the  Company's
products and,  therefore,  could discontinue  carrying the Company's products in
favor of a  competitor's  product  or for any other  reason.  In  addition,  the
Company is dependent  upon the continued  viability  and financial  stability of
these  dealers,   retailers  and  other  resellers,  some  of  which  are  small
organizations with limited capital.  The Company believes that its future growth
and  success  will  depend in large  part upon its  dealer,  retailer  and other
reseller  channels.  Accordingly,  if  a  significant  number  of  its  dealers,
retailers and other  resellers  were to experience  financial  difficulties,  or
otherwise  become unable or unwilling to promote,  sell or pay for the Company's
products, the Company's results of operations could be adversely affected.

<PAGE 18>

Competition

     The markets for technology-based IT training products and graphics software
products  are  highly   competitive  and   characterized  by  rapid  changes  in
technology.  In the  technology-based  IT training products market,  the Company
competes  primarily  with a small number of small private  companies,  and a few
large  public  companies.  In the market for  graphics  software  products,  the
Company  competes  primarily  with  several  large public  companies,  including
AutoDesk,   Inc.,   International   Microcomputer  Software,   Inc.,  and  Visio
Corporation.

     Certain of the Company's  competitors have substantially greater financial,
marketing and technical  resources  than the Company.  There can be no assurance
that other  companies  have not  developed or  marketed,  or will not develop or
market,  products that are superior to those of the Company, that are offered at
substantially  lower  prices  than  those of the  Company  or that  have or will
achieve greater market acceptance than those of the Company.


Reliance on Microsoft Technology

     The Company's  technology-based  IT training products and graphics software
products are designed for Microsoft technologies,  including Windows NT, Windows
98,  Windows 95,  Windows 3.1, and MS-DOS.  Although the Company  believes  that
Microsoft  technologies  are and will be widely  utilized by its  customers,  no
assurance can be given that these  individuals or businesses will actually adopt
such  technologies  as  anticipated  or will not in the future  migrate to other
computing  technologies  that  the  Company  does  not  support.  Moreover,  the
Company's  strategy will require that the Company's  products and  technology be
compatible with new developments in Microsoft's technology.


Risks Associated with the Internet

     The technology  marketplace  has recently  experienced a higher emphasis on
Internet-related  services and content  tailored for the Internet and  corporate
intranets. The Company has incurred costs and made investments to take advantage
of opportunities  created by the Internet and corporate  intranets.  The Company
expects to incur  significant  additional  costs as it continues to pursue these
and other  Internet-related  opportunities.  There can be no assurance  that the
Company's  Internet  strategy  will  be  successful,   or  that  the  costs  and
investments  in this area  will  provide  satisfactory  results.  The  Company's
failure to execute its Internet  strategy  successfully  and in a timely  manner
could materially and adversely affect its competitive position and its financial
results.


Risks Associated with the Corporate Sales Efforts

     The Company has recently  begun a major effort to achieve sales directly to
corporate  customers.  The Company has incurred costs and made  investments in a
direct corporate sales force and the infrastructure to support this sales force.
The Company  expects to incur  significant  additional  costs as it continues to
pursue these opportunities. Direct sales to corporate customers normally involve
a longer sales cycle than the  Company's  sales through  other  activities.  The
sales and timing of  licensing  agreements  to corporate  customers  could cause
volatility  in,  and  materially   adversely  affect,  the  Company's  quarterly
operating results.  There can be no assurance that the Company's corporate sales
efforts will be successful,  or that the costs and investments in this area will
provide  satisfactory  results.  The Company's  failure to execute its corporate
sales  strategy   successfully   could   materially  and  adversely  affect  its
competitive position and its financial results.

<PAGE 19>

Dependence on Key Personnel

     The Company's  future  success will depend to a  significant  extent on the
efforts  and  abilities  of  Michael  A.  Webster,  the  Chairman  of the Board,
President and Chief  Executive  Officer;  Robert E. Webster,  the Executive Vice
President and Secretary;  Robert C. Moore,  Jr.,  Treasurer and Chief  Financial
Officer; and certain other managerial, technical, sales and marketing personnel.
The loss of the  services of any of these  individuals  or group of  individuals
could  have a  material  adverse  effect on the  Company's  business,  financial
condition and results of operations.  None of the Company's  executive  officers
has entered into an employment contract with the Company.  The Company maintains
a key-man  life  insurance  policy on Michael A.  Webster,  but not on any other
person.  The future  success  of the  Company  will  depend in large part on its
ability to attract and retain qualified management and technical employees,  and
there can be no assurance that the Company will be able to do so.


Management of Growth

     The Company has grown  rapidly  since its formation and may grow rapidly in
the future. This growth has resulted in an increase in  responsibilities  placed
upon the Company's  management  and has placed added  pressures on the Company's
operating and other systems. To manage its growth effectively,  the Company will
be required to continue to upgrade and add systems and  controls  and to expand,
train  and  manage  its  employee  base.  There  can be no  assurance  that  the
management skills and systems currently in place will be adequate if the Company
continues  to grow,  or that the Company  will be able to  implement  additional
systems successfully and in a timely manner. In addition,  the Company from time
to time may seek acquisitions of businesses,  products and technologies that are
complementary to those of the Company or that allow it to enter new markets. Any
such  acquisition  may place  additional  strains upon the Company's  management
resources.


Management Discretion over Use of Capital

     The Company  currently  has no specific  plan for a  substantial  amount of
capital.  No  specific  amounts  have been  allocated  for such  items as market
development,  product development,  and possible acquisitions.  Accordingly, the
Company's management will have discretion to allocate a major portion of capital
to uses which shareholders may not deem desirable, and there can be no assurance
that the capital can or will be invested to yield a significant return.


Future Capital Needs

     The Company  currently  anticipates that the available funds and cash flows
generated from operations,  will be sufficient to meet its anticipated needs for
working capital and capital  expenditures for the next two years.  However,  the
Company could need additional funds in order to fund business expansion, develop
new  or  enhanced  products,   respond  to  competitive   pressures  or  acquire
complementary  products,  businesses or  technologies.  If additional  funds are
raised  through  the  issuance of equity or  convertible  debt  securities,  the
percentage of ownership of the  shareholders  will be reduced,  shareholders may
experience additional dilution and such securities may have rights,  preferences
or  privileges  senior to those of the holders of the  Company's  common  stock.
There can be no assurance that  additional  financing will be available on terms
favorable to the Company,  or at all. If adequate funds are not available or are
not  available  on  acceptable  terms,  the  Company  may  not be  able  to fund
expansion, take advantage of unanticipated acquisition opportunities, develop or
enhance services or products or respond to competitive pressures. Such inability
could  have a  material  adverse  effect on the  Company's  business,  operating
results and financial condition.

<PAGE 20>

Potential Fluctuations in Quarterly Operating Results

     The Company's  quarterly  revenue and operating  results have varied in the
past and are likely to vary in the future.  Because the  Company's  products are
standard  and  off-the-shelf,  it operates  with little  backlog and most of its
revenues in each quarter result from orders booked in that quarter.  The Company
establishes  its  expenditure  levels  based on its  expectations  as to  future
revenue  and,  if  revenue  levels  are below  expectations,  expenses  could be
disproportionately  high.  As  a  result,  a  drop  in  near-term  demand  could
significantly affect both revenue and profits in any quarter. In the future, the
Company's  operating  results may  fluctuate for this reason or as a result of a
number  of other  factors,  including  increased  expenses,  timing  of  product
releases,  increased competition,  variations in the mix of sales, announcements
of new products by the Company or its competitors and capital spending  patterns
of the Company's  customers.  As a result, there can be no assurance the Company
will be able to maintain profitability on an annual or quarterly basis.

     Because  of these  factors,  the  Company  believes  that  period-to-period
comparisons  of its results of operations  are not  necessarily  meaningful  and
should not be relied upon as indications of future performance.  Furthermore, it
is possible that in some future  quarters the Company's  operating  results will
fall below the  expectations of the Company,  market analysts and investors.  In
such event,  the price of the Company's  Common Stock would likely be materially
adversely affected. [See Note 16 of Notes to Financial Statements.]


Dependence on Intellectual Property Rights; Risk of Infringement

     The  Company  relies  on a  combination  of  trade  secret,  copyright  and
trademark laws,  nondisclosure  agreements and other contractual  provisions and
technical measures to protect its intellectual  property rights. There can be no
assurance  that these  protections  will be adequate  to prevent  the  Company's
competitors from copying or reverse-engineering  the Company's products, or that
the Company's  competitors will not independently  develop technologies that are
substantially  equivalent or superior to the Company's  technology.  The Company
has no patents,  and existing  copyright laws afford only limited protection for
the Company's  intellectual  property rights and will not protect such rights in
the event  competitors  independently  develop  products similar to those of the
Company.   The  Company   licenses  its  software   products   primarily   under
"shrink-wrap"  licenses that are not signed by its licensees.  These shrink-wrap
licenses  may be  unenforceable  under  the laws of  certain  jurisdictions.  In
addition,  the laws of certain countries in which the Company's  products are or
may be licensed do not protect the Company's products and intellectual  property
rights to the same extent as the laws of the United States.

     There has been substantial litigation regarding patent, trademark and other
intellectual  property rights involving software and other technology companies.
There can be no assurance  that a third party will not assert that the Company's
technology  violates  its  intellectual  property  rights in the future.  As the
number  of  products  in  the  Company's   target  markets   increases  and  the
functionality  of  these  products   further  overlap,   developers  may  become
increasingly  subject to infringement  claims. Any such claims,  with or without
merit, can be time consuming and expensive to defend.  There can be no assurance
that third parties will not assert  infringement  claims  against the Company in
the future  with  respect to its  current  or future  products  or that any such
assertion  will not require the Company to enter into  royalty  arrangements  or
litigation that could be costly to the Company.

<PAGE 21>

International Sales and Operations

      The  Company  sells its  products  in certain  international  markets  and
intends to expand its sales in these  markets.  The  Company  has  entered  into
distribution  arrangements  in  the  United  Kingdom,  France,  Germany,  Japan,
Australia,  and Turkey. The Company's  international business may be affected by
such factors as local  economic and market  conditions,  political  and economic
instability,  difficulties  in enforcing  intellectual  property and contractual
rights, fluctuations in currency exchange rates and the need for compliance with
a wide variety of foreign and United States export regulations.  There can be no
assurance  that one or more of these  factors  will not have a material  adverse
effect  on  the  Company's  international  operations  and,  consequently,   the
Company's business, results of operations and financial condition.


Product Liability

     The  Company's  license  agreements  with its customers  typically  contain
provisions  designed  to limit  the  Company's  exposure  to  potential  product
liability  claims.  It is possible,  however,  that the  limitation of liability
provisions  contained in the Company's  license  agreements may not be effective
under the laws of certain state and foreign jurisdictions.  The sale and support
of products by the Company and its retailers and other  resellers may entail the
risk of such claims,  and there can be no assurance that the Company will not be
subject to such claims in the future. A product  liability claim brought against
the Company could have a material  adverse  effect upon the Company's  business,
results of operations and financial condition.


Possible Volatility of Stock Price

     The trading  prices of the  Company's  common stock is highly  volatile and
could be subject to wide  fluctuations  in response to factors such as actual or
anticipated  variations in the Company's  operating  results,  announcements  of
technological innovations, new products or services introduced by the Company or
its competitors,  changes in earnings estimates by securities analysts,  general
market  conditions  and other factors.  Historically,  the trading volume of the
common  stock has been very small and the  market for the common  stock has been
materially  less  liquid  than that of most  other  publicly  traded  companies.
Significant  sales of the Company's common stock could have an adverse effect on
the  market  price of the  common  stock.  Further,  the stock  markets,  and in
particular The Nasdaq Stock Market,  have  experienced  extreme price and volume
fluctuations  that  have  particularly  affected  the  market  prices  of equity
securities of many  technology  companies and that often have been  unrelated or
disproportionate  to the operating  performance of such  companies.  The trading
prices of many technology  companies' stocks are at or near historical highs and
reflect price to earnings ratios  substantially  above historical levels.  There
can be no assurance that these trading prices and price to earnings  ratios will
be sustained.  These broad market factors may adversely  affect the market price
of the Company's  common stock.  These market  fluctuations,  as well as general
economic, political and market conditions such as recessions,  interest rates or
international currency fluctuations may adversely affect the market price of the
common stock.


Potentially Adverse Impact from Acquisitions

     The Company has in the past acquired, and may continue from time to time in
the future to acquire,  businesses,  services,  product lines, or  technologies.
There can be no assurance that the  anticipated  benefits of recently  concluded
acquisitions  will be  realized,  or that  the  Company  will be  successful  in
identifying  suitable  acquisition  opportunities in the future. There can be no
assurance  that the  Company  will be able to  successfully  integrate  acquired
businesses, services, product lines, or technologies.  Failure of the Company to
integrate and manage acquired businesses successfully, to retain their employees
and  to  address   successfully  new  markets   associated  with  such  acquired
businesses, services, product lines, or technologies may have a material adverse
effect on the Company's  business,  operating  results and financial  condition.
Certain of the  Company's  acquisitions  have  resulted  in various  charges and
expenses that have adversely  affected,  and will continue to adversely  affect,
the Company's operating results and financial condition. Future acquisitions may
also  result in  potential  charges  that may  adversely  affect  the  Company's
earnings and may involve the issuance of shares of the Company's stock to owners
of acquired businesses, resulting in dilution in the percentage of the Company's
stock owned by other shareholders.

<PAGE 22>

Ownership Concentration

     The  Company's  directors  and executive  officers,  (primarily  Michael A.
Webster and Robert E. Webster),  beneficially own in the aggregate approximately
54% of the  Company's  outstanding  Common  Stock.  If these  shareholders  vote
together, they will be able to elect all of the Company's directors, control the
management  and policies of the Company and  determine the outcome of any matter
submitted to a vote of the  Company's  shareholders,  including any amendment of
the  Company's  certificate  of  incorporation  and  certain  mergers  and other
business  combinations.  This  presents the potential for a conflict of interest
between the Company and these shareholders, and may act to reduce the likelihood
of a  successful  attempt  to take  over the  Company  or any  acquisition  of a
substantial amount of Common Stock without the consent of these shareholders.


Anti-Takeover Considerations

     The Company has an authorized  class of 10,000,000  shares of  undesignated
Preferred  Stock,  $.01 par value,  which may be issued on such terms,  and with
such rights,  preferences and designations,  as the Company's Board of Directors
may determine.  The Company is subject to the Oklahoma General  Corporation Act,
which contains provisions that restrict certain business  combinations.  Some or
all of the  foregoing  factors  could  have the effect of  discouraging  certain
attempts to acquire the Company and, as a result,  could  deprive the  Company's
shareholders  of  opportunities  to sell their  shares of Common Stock at prices
higher than prevailing market prices.


Seasonality

     The  Company's  business  has been  affected  somewhat by seasonal  trends,
including  higher net  revenues  in the fiscal  quarter  ended  December 31 as a
result  of  strong  calendar  year-end  holiday  purchases  by end  users of its
products.  As a result,  the Company may  experience  lower net  revenues in the
fiscal  quarters  ended  March 31,  June 30 and  September  30.  These  seasonal
patterns may be overshadowed in particular quarters by the timing of new product
introductions,  expansion  into new  markets  and other  factors  affecting  the
Company's business.


Absence of Dividends

     Although  the Company  paid  dividends  on its capital  stock in 1997,  the
Company  does not intend to pay any cash  dividends  on its Common Stock for the
foreseeable future.


Forward-Looking Statements

     All  statements  other  than  statements  of  historical  fact in this 10-K
regarding  the Company's  financial  position,  business  strategy and plans and
objectives   of   management   of  the  Company  for  future   operations,   are
forward-looking  statements. When used in this 10-K, words such as "anticipate,"
"believe,"  "estimate," "expect," "intend," "will," and similar expressions,  as
they  relate  to  the  Company  or  its  management,   identify  forward-looking
statements.  Such  forward-looking  statements  are based on the  beliefs of the
Company's  management as well as assumptions  made by and information  currently
available to the Company's  management.  Actual results could differ  materially
from those contemplated by the forward-looking statements as a result of certain
factors,  such as those disclosed under "Future  Performance and Additional Risk
Factors," including but not limited to technological change, product development
risks,   competitive   factors  and  pricing   pressures  and  general  economic
conditions.  Such  statements  reflect  the current  views of the  Company  with
respect to future events and are subject to these and other risks, uncertainties
and  assumptions  relating  to the  operations,  results of  operations,  growth
strategy  and  liquidity  of  the  Company.  All  subsequent  written  and  oral
forward-looking  statements attributable to the Company or persons acting on its
behalf are expressly qualified in their entirety by this paragraph.

<PAGE 23>

Item 7a. Quantitative and Qualitative Disclosures About Market Risk

     The Company is exposed to the impact of interest rate and foreign  currency
fluctuations.  The Company's objective in managing its exposure to interest rate
changes is to maximize its potential  interest income without  sacrificing  cash
equivalent  and  short-term  investment  quality.  The  Company  will  invest in
instruments which are exempt from Federal income taxes if the taxable equivalent
yield is more attractive than alternative fully-taxed  investments.  The Company
does not currently  have  interest  rate exposure from  borrowing as it does not
have a line of credit, and its short-term loan is at a fixed 5% rate and matures
June 1, 1999.

     In 1998 and 1997 sales to countries other than the United States and Canada
accounted for 6% and 7%,  respectively,  of total revenues.  These international
revenues are denominated in foreign  currencies.  Consequently a decrease in the
value of a relevant  foreign  currency  in  relation  to the U.S.  dollar  could
adversely  affect the  Company's net revenues.  The Company's  foreign  currency
transactional  exposures exist primarily with the U.K. pound,  the French franc,
the German mark and the Japanese yen.

     The Company does not utilize  interest rate swaps or hedge  exposures  with
foreign currency forward contracts.


Item 8. Financial Statements and Supplementary Data

     The financial  statements and supplementary data are included as an exhibit
in Item 14 (a).


Item 9.  Changes  in  and  Disagreements  with  Accountants  on  Accounting  and
         Financial Disclosures

     None


PART III


Item 10. Directors and Executive Officers of the Registrant

     Incorporated by reference to the Company's definitive Proxy Statement to be
filed  with the  Securities  and  Exchange  Commission  in  connection  with the
Company's 1999 Annual Meeting of Stockholders.

<PAGE 24>

Item 11. Executive Compensation

     Incorporated by reference to the Company's definitive Proxy Statement to be
filed  with the  Securities  and  Exchange  Commission  in  connection  with the
Company's 1999 Annual Meeting of Stockholders.


Item 12. Security Ownership of Certain Beneficial Owners and Management

     Incorporated by reference to the Company's definitive Proxy Statement to be
filed  with the  Securities  and  Exchange  Commission  in  connection  with the
Company's 1999 Annual Meeting of Stockholders.


Item 13. Certain Relationships and Related Transactions

     Incorporated by reference to the Company's definitive Proxy Statement to be
filed  with the  Securities  and  Exchange  Commission  in  connection  with the
Company's 1999 Annual Meeting of Stockholders.


PART IV


Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K

(a)      Documents Filed as Part of This Annual Report on Form 10-K

     1.   Financial Statements.  See Index to Consolidated  Financial Statements
          on page F-1

     2.   Financial  Statement Schedule II. See Index to Consolidated  Financial
          Statements on page F-1

(b)      Reports on Form 8-K:
                  
     The  Company  did not file any  reports on Form 8-K during the period  from
     October 1, 1998, to December 31, 1998.

(c)      Exhibits:

     (3.1) Amended and Restated Certificate of Incorporation (i)
     (3.2) Amended and Restated Bylaws (i)
     (10.1) ViaGrafix Corporation 1995 Stock Option Plan (ii)
     (10.2) Agreement with Robert Moore Regarding Change in Control        
     (21.1) Subsidiaries of the Registrant
     (23.1) Consent of Ernst & Young LLP, Independent Auditors
     (27.1) Financial Data Schedule
     (i)  Incorporated  herein by  reference  to the  exhibits to the  Company's
          Post-Effective  Amendment No. 1 to Form S-1 Registration Statement No.
          333-42633 dated March 4, 1998
     (ii) Incorporated   herein  by   reference  to  the   Company's   Form  S-8
          Registration Statement No. 333-59591 dated July 22, 1998

<PAGE>
                              
                             ViaGrafix Corporation

                 Consolidated Financial Statements and Schedule

                  Years ended December 31, 1998, 1997 and 1996
                       with Report of Independent Auditors




<PAGE F-1>

                              ViaGrafix Corporation

                        Consolidated Financial Statements



             Index to Consolidated Financial Statements and Schedule



Report of Independent Auditors...............................................F-2

Consolidated Financial Statements

Consolidated Balance Sheets as of December 31, 1998 and 1997.................F-3
Consolidated Statements of Income for the years ended
  December 31, 1998, 1997 and 1996...........................................F-4
Consolidated Statements of Changes in Shareholders' Equity
  for the years ended December 31, 1998, 1997 and 1996.......................F-5
Consolidated Statements of Cash Flows for the years ended
  December 31, 1998, 1997 and 1996...........................................F-6
Notes to Consolidated Financial Statements...................................F-7

Schedule II - Valuation and Qualifying Accounts for the
  years ended December 31, 1998, 1997 and 1996..............................F-25

Not covered by Report of Independent Auditors:
    Quarterly Financial Information (unaudited).............................F-24


All other  schedules  have been omitted  since the required  information  is not
present or is not present in amounts  sufficient  to require  submission  of the
schedule,  or  because  the  information  required  is  included  in  respective
financial statements or notes thereto.


<PAGE F-2>


                         Report of Independent Auditors

The Board of Directors and Shareholders
ViaGrafix Corporation

We have  audited  the  accompanying  consolidated  balance  sheets of  ViaGrafix
Corporation  as of  December  31, 1998 and 1997,  and the  related  consolidated
statements of income,  changes in shareholders'  equity, and cash flows for each
of the three  years in the period  ended  December  31,  1998.  Our audits  also
included the financial  statement schedule included in the Index to Consolidated
Financial   Statements.   These  financial   statements  and  schedule  are  the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these financial statements and schedule based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  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
ViaGrafix  Corporation  at  December  31,  1998 and 1997,  and the  consolidated
results of  operations  and cash flows for each of the three years in the period
ended  December 31, 1998,  in  conformity  with  generally  accepted  accounting
principles. Also, in our opinion, the related financial statement schedule, when
considered  in  relation  to the basic  financial  statements  taken as a whole,
presents fairly in all material respects the information set forth therein.

                                              ERNST & YOUNG LLP

                                              /s/ Ernst & Young LLP
                                              (Original Manually Signed)

Tulsa, Oklahoma
March 19, 1999


<PAGE F-3>
<TABLE>
 
                              ViaGrafix Corporation

                           Consolidated Balance Sheets

                                                                                     December 31
                                                                                1998            1997
                                                                           --------------------------------
<CAPTION>
<S>                                                                           <C>            <C>    
Assets
Current assets:
   Cash and cash equivalents                                                  $10,046,123    $   217,654
   Short-term investments                                                       3,000,000              -
   Trade accounts receivable (net of allowance for doubtful accounts
     of $147,714 and $60,254 in 1998 and 1997, respectively)                    4,713,140      2,455,752
   Income tax receivable                                                          205,172              -
   Inventories                                                                  1,908,728      1,411,257
   Prepaid expenses                                                               517,918        314,668
   Deferred income taxes                                                           57,165          4,150
                                                                           --------------------------------
Total current assets                                                           20,448,246      4,403,481

Property, plant and equipment                                                   4,379,992      3,262,637
Accumulated depreciation                                                       (1,315,517)      (959,025)
                                                                           --------------------------------
                                                                                3,064,475      2,303,612
Capitalized customer lists (net of accumulated
   amortization of $147,662 in 1998)                                              206,727              -
Capitalized software (net of accumulated amortization of $63,987 in 1998)         169,307              -
Prepaid royalties and licenses (net of accumulated
   amortization of $77,500 in 1998)                                               542,500              -
Goodwill (net of accumulated amortization of $44,614                               87,575        100,794
   and $31,395 in 1998 and 1997, respectively)
Note receivable - officer                                                         187,902              -
Deferred income taxes                                                             509,490        611,022
                                                                           --------------------------------
Total assets                                                                  $25,216,222     $7,418,909
                                                                           ================================

Liabilities and shareholders' equity Current liabilities:
   Trade accounts payable                                                     $ 1,767,109     $  847,890
   Notes payable                                                                  103,500              -
   Accrued liabilities                                                            511,707        232,961
   Income taxes payable                                                                 -        208,768
   Current portion of long-term debt                                                    -        789,513
                                                                           --------------------------------
Total current liabilities                                                       2,382,316      2,079,132

Long-term debt                                                                          -      2,826,727

Shareholders' equity:
   Common stock, $.01 par value, authorized 40,000,000 shares; issued
     5,866,340 and 3,861,881 shares in 1998 and 1997, respectively                 58,663         38,619
   Series A convertible preferred stock, $.01 par value; authorized
     10,000,000 shares; issued and outstanding 855,000 shares in 1997                   -          8,550
   Additional paid-in capital                                                  20,505,713      1,487,420
   Unearned compensation                                                         (104,135)      (148,798)
   Retained earnings                                                            2,373,665      1,127,259
                                                                           --------------------------------
Total shareholders' equity                                                     22,833,906      2,513,050
                                                                           --------------------------------
Total liabilities and shareholders' equity                                    $25,216,222     $7,418,909
                                                                           ================================
</TABLE>

See accompanying notes.


<PAGE F-4>
<TABLE>

                              ViaGrafix Corporation

                        Consolidated Statements of Income




                                                                    Year ended December 31
                                                            1998             1997              1996
                                                     ------------------------------------------------------

<CAPTION>
<S>                                                       <C>               <C>              <C>        
Net sales                                                 $18,750,439       $13,694,696      $10,076,742
Cost of sales                                               4,545,335         3,042,290        2,613,583
                                                     ------------------------------------------------------
Gross profit                                               14,205,104        10,652,406        7,463,159

Selling, general and administrative expense                 6,211,810         4,120,114        3,704,267
Research and development expense                            1,696,948         1,162,000          467,000
Depreciation and amortization                                 733,862           319,281          684,882
Advertising expense                                         4,443,085         1,960,625        1,207,347
                                                     ------------------------------------------------------
Operating income                                            1,119,399         3,090,386        1,399,663

Other income (expense):
    Interest income and other                                 535,002            20,535           62,459
    Interest expense                                          (53,713)         (272,349)        (324,547)
                                                     ------------------------------------------------------
Income before income taxes                                  1,600,688         2,838,572        1,137,575

Provision for income tax                                      354,282           815,930          463,058
                                                     ------------------------------------------------------
Net income                                                $ 1,246,406       $ 2,022,642      $   674,517
                                                     ======================================================

Basic earnings per common share                               $.22              $.51             $.18
                                                     ======================================================

Weighted average common shares used in
    computing basic earnings per share                      5,640,044         3,859,443        3,831,360
                                                     ======================================================

Diluted earnings per common and
    common equivalent share                                   $.21              $.45             $.15
                                                     ======================================================

Weighted average common and common
    equivalent shares used in computing
    diluted earnings per share                              5,841,978         4,497,589        4,404,739
                                                     ======================================================
</TABLE>

See accompanying notes.


<PAGE F-5>
<TABLE>
                              ViaGrafix Corporation

           Consolidated Statements of Changes in Shareholders' Equity

                                                               Common     Preferred     Additional       Unearned       Retained    
                                                                Stock       Stock    Paid-in Capital   Compensation     Earnings    
                                                            ------------------------------------------------------------------------
<CAPTION>
<S>                                                              <C>         <C>        <C>          <C>               <C>          
Balance at December 31, 1995                                     $57,143     $8,550     $  1,491,450 $            -    $   681,614  
Purchase of 4,886 treasury common shares, at cost                      -          -                -              -              -  
Exercise of 28,943 stock options                                       -          -           14,445              -              -  
Net income                                                             -          -                -              -        674,517  
                                                            ------------------------------------------------------------------------
Balance at December 31, 1996                                      57,143      8,550        1,505,895              -      1,356,131  
Purchase of 1,143 treasury common shares, at cost                      -          -                -              -              -  
Exercise of 29,252 stock options                                       -          -           18,777              -              -  
Stock options granted at less than
   estimated fair market value                                         -          -          180,835       (180,835)             -  
Amortization of unearned compensation                                  -          -                -         32,037              -  
Declared and paid $.117 dividend per common share
   equivalent on common and preferred shares outstanding               -          -                -              -       (505,800) 
Cancellation of 1,852,405 treasury
   common shares, at cost                                        (18,524)         -         (218,087)             -     (1,745,714) 
Net income                                                             -          -                -              -      2,022,642  
                                                            ------------------------------------------------------------------------
Balance at December 31, 1997                                      38,619      8,550        1,487,420       (148,798)     1,127,259  
                                                            ------------------------------------------------------------------------
Exercise of 44,783 stock options                                     447          -           54,236              -              -  
Cancellation of 6,114 stock options granted
   at less than estimated fair market value                            -          -          (12,626)        12,626              -  
Amortization of unearned compensation                                  -          -                -         32,037              -  
Conversion of preferred stock to                                   4,886     (8,550)           3,664              -              -  
   488,571 shares of common stock
Initial public offering of 1,750,000 common shares                17,500          -       20,464,476              -              -  
Purchase and cancellation of 278,900 common shares                (2,789)         -       (1,491,457)             -              -  
Net income                                                             -          -                -              -      1,246,406  
                                                            ------------------------------------------------------------------------
Balance at December 31, 1998                                     $58,663  $       -      $20,505,713      $(104,135)    $2,373,665  
                                                            ========================================================================
</TABLE>
<TABLE>

Consolidated Statements of Changes in Shareholders' Equity (Continued)

                                                             Common Shares                    
                                                              in Treasury         Total       
                                                            ----------------------------------
<CAPTION>
<S>                                                            <C>           <C>              
Balance at December 31, 1995                                   $(1,995,600)  $     243,157    
Purchase of 4,886 treasury common shares, at cost                   (5,148)         (5,148)   
Exercise of 28,943 stock options                                    10,130          24,575    
Net income                                                               -         674,517    
                                                            ----------------------------------
Balance at December 31, 1996                                    (1,990,618)        937,101    
Purchase of 1,143 treasury common shares, at cost                   (2,200)         (2,200)   
Exercise of 29,252 stock options                                    10,493          29,270    
Stock options granted at less than                                                            
   estimated fair market value                                           -               -    
Amortization of unearned compensation                                    -          32,037    
Declared and paid $.117 dividend per common share                                             
   equivalent on common and preferred shares outstanding                 -        (505,800)   
Cancellation of 1,852,405 treasury                                                            
   common shares, at cost                                        1,982,325               -    
Net income                                                               -       2,022,642    
                                                            ----------------------------------
Balance at December 31, 1997                                             -       2,513,050    
                                                            ----------------------------------
Exercise of 44,783 stock options                                         -          54,683    
Cancellation of 6,114 stock options granted                                                   
   at less than estimated fair market value                              -               -    
Amortization of unearned compensation                                    -          32,037    
Conversion of preferred stock to                                         -               -    
   488,571 shares of common stock                                                             
Initial public offering of 1,750,000 common shares                       -      20,481,976    
Purchase and cancellation of 278,900 common shares                       -      (1,494,246)   
Net income                                                               -       1,246,406    
                                                            ----------------------------------
Balance at December 31, 1998                                 $           -     $22,833,906    
                                                            ==================================
                                                            
</TABLE>

See accompanying notes.


<PAGE F-6>
<TABLE>

                              ViaGrafix Corporation

                      Consolidated Statements of Cash Flows

                                                                        Year ended December 31
                                                                 1998           1997            1996
                                                            -----------------------------------------------
<CAPTION>
<S>                                                             <C>           <C>            <C>     
Operating activities
Net income                                                      $1,246,406    $ 2,022,642    $   674,517
Adjustments to reconcile net income to net
   cash provided by operating activities:
     Depreciation and amortization expense                         733,862        319,281        684,882
     Deferred income tax provision (benefit)                        48,517        186,437       (137,885)
     Noncash interest expense                                       44,760              -        142,342
     Loss on disposal of assets                                     79,089          9,419              -
     Bad debt expense                                              118,962        107,497              -
     Write-off of purchased research and development                36,933              -              -
     Amortization of unearned compensation                          32,037         32,037              -
     Cash provided by (used in) changes in
       operating assets and liabilities:
          Trade accounts receivable                             (2,365,722)    (1,363,859)         2,987
          Inventories                                             (497,471)      (580,685)        (5,585)
          Income tax receivable                                   (205,172)             -              -
          Prepaid expenses                                        (203,250)       (32,782)      (113,418)
          Trade accounts payable                                   919,219        519,468       (401,036)
          Accrued liabilities                                      278,746         83,772        102,562
          Income taxes payable                                    (208,768)      (250,219)       428,447
                                                            -----------------------------------------------
Net cash provided by operating activities                           58,148      1,053,008      1,377,813

Investing activities
Purchases of property, plant and equipment                      (1,149,295)      (744,013)      (285,282)
Purchase of Make-It-So, Inc. assets                               (681,528)             -              -
Proceeds from disposal of equipment                                 27,633              -              -
Purchase of short-term investments                              (3,000,000)             -              -
Issuance of note receivable - officer                             (187,902)             -              -
Prepaid royalties and licenses                                    (620,000)             -              -
                                                            -----------------------------------------------
Net cash used in investing activities                           (5,611,092)      (744,013)      (285,282)

Financing activities
Initial public offering of common stock                         20,481,976              -              -
Purchase and cancellation of common stock                       (1,494,246)             -              -
Repayment of debt                                               (3,661,000)      (621,958)      (137,623)
Dividend to common and preferred shareholders                            -       (505,800)             -
Purchase of treasury common stock                                        -         (2,200)        (5,148)
Exercise of stock options                                           54,683         29,270         24,575
                                                            -----------------------------------------------
Net cash provided by (used in) financing activities             15,381,413     (1,100,688)      (118,196)
                                                            -----------------------------------------------

Net increase (decrease) in cash and cash equivalents             9,828,469       (791,693)       974,335
Cash and cash equivalents at beginning of year                     217,654      1,009,347         35,012
                                                            -----------------------------------------------
Cash and cash equivalents at end of year                       $10,046,123   $    217,654     $1,009,347
                                                            ===============================================

Supplemental cash flow information:
   Interest paid                                             $       8,953   $    300,626    $   168,794
                                                            ===============================================
   Income taxes paid                                         $     719,705   $    479,000    $   173,000
                                                            ===============================================
</TABLE>

See accompanying notes.


<PAGE F-7>

                              ViaGrafix Corporation

                   Notes to Consolidated Financial Statements

                           December 31, 1998 and 1997

                                                                  
1. Summary of Business and Significant Accounting Policies

General

ViaGrafix  Corporation  is engaged  primarily  in the  business  of  developing,
producing  and  selling,   directly  to  end-users  and  through  resellers  and
distributors,  a wide range of computer software training videos and interactive
CD-ROM   software   training   products   ("training   products")   as  well  as
Computer-Aided  Design  ("CAD")  software,   which  is  primarily  used  in  the
engineering  and  architectural  fields.  Beginning in August 1998,  the Company
entered the business of providing e-mail list management and Internet  marketing
services through its new wholly-owned subsidiary, Make-It-So, Inc.

Principles of Consolidation

The  consolidated   financial  statements  include  the  accounts  of  ViaGrafix
Corporation and its wholly-owned subsidiary, Make-It-So, Inc. (collectively, the
"Company"). All intercompany transactions have been eliminated in consolidation.

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.

Cash and Cash Equivalents

The Company considers all highly liquid investments with original  maturities of
three months or less when  purchased to be cash  equivalents.  Cash  equivalents
consist of money  market and  investor  accounts of  $9,652,746  and $166,394 at
December 31, 1998 and 1997, respectively.



<PAGE F-8>
                             ViaGrafix Corporation

                   Notes to Consolidated Financial Statements (continued)


1. Summary of Business and Significant Accounting Policies (continued)

Revenue Recognition

Revenue is recognized on all products at the time of delivery. Computer software
training  videos  and  interactive  CD-ROM  software  training  products  can be
returned within 30 days or, for certain retailers,  under a stock return policy.
The Company  records an estimate of the  amount,  when  significant,  of returns
expected  in the next 30 days or under each stock  return  policy at the time of
the initial delivery of the products. The Company sells its CAD software with no
obligations  beyond the delivery date of the software.  The Company's  price for
its products is fixed at the date of sale, and the sale is not  contingent  upon
resale of the products or affected by damage or theft of the products.

Short-Term Investments

Short-term  investments  are comprised of an investment in a municipal  security
with an original maturity of six months. The security matures June 28, 1999.

Inventories

Inventories are stated at the lower of cost or market.  Cost is determined using
the average cost method.

Prepaid Expenses

Throughout  the year the Company  participates  in  numerous  trade  shows.  The
Company is required to prepay  registration  and booth fees for the trade shows.
These prepayments,  which totaled $167,467 and $111,193 at December 31, 1998 and
1997, respectively, are included in prepaid expenses.



<PAGE F-9>
                             ViaGrafix Corporation

                   Notes to Consolidated Financial Statements (continued)

1. Summary of Business and Significant Accounting Policies (continued)

Property, Plant and Equipment

Property,  plant and  equipment  are  stated at cost and are  depreciated  using
accelerated methods over the following estimated useful lives:

                                                            Years
                                                      ------------------

         Building and building improvements                  10-39
         Production equipment                                 5-7
         Automobiles                                          5-7
         Furniture and fixtures                               5-7

Interest is capitalized on borrowed funds used to finance  building and building
improvement projects during construction.  Approximately $28,400 of interest was
capitalized for the year ended December 31, 1997.  Depreciation  expense for the
years  ended  December  31,  1998,  1997  and 1996 was  $431,494,  $300,562  and
$349,572, respectively.

Goodwill

Goodwill,  which  represents  the excess of the purchase  price and  liabilities
assumed over the fair value of tangible and specifically  identified  intangible
assets acquired, is being amortized over 10 years.

Amortization of goodwill was $13,219 in 1998, 1997 and 1996, respectively.

Software Research and Development Costs

The Company's policy is to capitalize any significant software development costs
subsequent to the establishment of technological  feasibility until such time as
the  product is  available  for general  release.  All costs  incurred  prior to
technological  feasibility are expensed as research and  development  costs when
incurred.  Due to the method  employed  by the Company to develop  software,  an
insignificant  amount  of costs  are  incurred  between  the date  technological
feasibility is established, and when the products are ready for general release.


<PAGE F-10>
                             ViaGrafix Corporation

                   Notes to Consolidated Financial Statements (continued)

1. Summary of Business and Significant Accounting Policies (continued)

As described in Note 2, the Company  allocates a portion of the cost of acquired
enterprises  to  intangible  assets based upon the  estimated  fair value of the
intangibles, including software in various stages of development. The fair value
of  software  development  projects  which  have not yet  reached  technological
feasibility  and which have no  alternative  use are  expensed as  research  and
development  in the  period  acquired.  The fair  values of all other  developed
software  products are included in  capitalized  software and amortized over the
expected remaining life of the specific software products.  Capitalized software
amortization  expense  was  $63,987,  $5,500 and  $322,091  for the years  ended
December 31, 1998, 1997 and 1996, respectively.

Income Taxes

Deferred  income taxes are computed using the liability  method and are provided
on all temporary  differences  between the financial reporting basis and the tax
basis of the Company's assets and liabilities.

Treasury Stock

Treasury  stock  purchases  were accounted for under the cost method whereby the
entire cost of the  acquired  stock was  recorded as treasury  stock.  Gains and
losses on the  subsequent  reissuance  of shares  were  credited  or  charged to
additional  paid-in  capital  or  retained  earnings,  respectively,  using  the
specific  identification  method.  All  treasury  stock was canceled in December
1997.

Incentive Stock Options

The Company has elected to follow  Accounting  Principles  Board Opinion No. 25,
"Accounting  for  Stock  Issued  to  Employees,"  ("APB  No.  25")  and  related
interpretations  in  accounting  for its  employee  stock  options  because  the
alternative  fair value  accounting  provided  for under  Statement of Financial
Accounting Standard ("SFAS") No. 123, "Accounting for Stock-Based Compensation,"
requires  use of option  valuation  models  that were not  developed  for use in
valuing employee stock options. Under APB No. 25, when the exercise price of the
Company's employee stock options equals the market price of the underlying stock
on the date of grant, no compensation expense is recognized.



<PAGE F-11>
                             ViaGrafix Corporation

                   Notes to Consolidated Financial Statements (continued)

1. Summary of Business and Significant Accounting Policies (continued)

Advertising Costs

Costs incurred for advertising are expensed when incurred.

Earnings Per Share

Basic  earnings  per  share  are based on the  average  number of common  shares
outstanding.  Diluted  earnings  per  share  for  1998,  1997 and  1996  assumes
conversion of the Company's Series A convertible preferred stock and exercise of
stock options outstanding using the treasury stock method.

Stock Split

Effective  December 12, 1997,  the Company  executed a 1 for 1.75 reverse  stock
split and also  changed  the par value of the common and  preferred  shares from
$.001 to $.01.  All prior  share and per share  amounts  have been  restated  to
reflect the reverse stock split and change in par value.

Fair Value Disclosure

The financial assets and other liabilities approximate their fair values because
of the short maturity of those instruments.

New Accounting Standards

In June 1997,  the FASB issued SFAS No. 130  "Reporting  Comprehensive  Income,"
which requires that a company report, by major components and as a single total,
the change in its net assets during the period from nonowner  sources;  and SFAS
No. 131,  "Disclosures About Segments of an Enterprise and Related Information,"
which  establishes  annual  and  interim  reporting  standards  for a  company's
operating  segments  and  related  disclosures  about  its  products,  services,
geographic areas, and major customers. Adoption of these statements was required
in 1998  but  did not  impact  the  Company's  financial  position,  results  of
operations  or cash  flows,  and had no  impact on the form and  content  of the
Company's disclosures.



<PAGE F-12>
                             ViaGrafix Corporation

                   Notes to Consolidated Financial Statements (continued)


1. Summary of Business and Significant Accounting Policies (continued)

In November  1997,  Statement of Position  ("SOP") No. 97-2,  "Software  Revenue
Recognition,"  was issued  which  supersedes  SOP No.  91-1,  "Software  Revenue
Recognition."  The Company was  required to adopt SOP No. 97-2 for  transactions
entered into in 1998.  The  adoption of this SOP had no impact on the  Company's
financial position, results of operations or cash flows.

In 1998,  SOP No.  98-1,  "Accounting  for the Costs of  Software  Developed  or
Obtained for Internal  Use," was issued.  This SOP  requires  capitalization  of
certain costs incurred in connection with an internal-use  software project. SOP
No. 98-5,  "Reporting on the Costs of Start-up  Activities,"  was also issued in
1998.  This  SOP  requires  costs  related  to  start-up  activities,  including
organization  costs,  to be expensed as incurred.  Adoption of these SOPs is not
required  until  1999.  Neither the  Company's  financial  position,  results of
operations  nor cash flows are  expected to be  significantly  impacted by these
SOPs when they are adopted in 1999.

In 1998,  SFAS No.  133,  "Accounting  for  Derivative  Instruments  and Hedging
Activities,"  was issued  which  requires  that all  derivative  instruments  be
recorded as assets or liabilities  on the balance sheet at fair value.  SFAS No.
133 is not  required to be adopted by the  Company  until  2000.  The  Company's
financial  position,  results of operations or cash flows are not expected to be
significantly impacted by this SFAS when adopted in 2000.

Reclassification

Certain 1997 and 1996 amounts have been  reclassified  to be consistent with the
1998 presentation.

2. Acquisitions

On July 31, 1998, the Company  acquired  certain  assets of Make-It-So,  Inc., a
privately held company based in San Mateo, California, that provides e-mail list
management and Internet marketing services.  The purchase  consideration totaled
$681,528 and was financed with existing cash balances and was accounted for as a
purchase, in accordance with APB No. 16, "Accounting for Business Combinations."



<PAGE F-13>
                             ViaGrafix Corporation

                   Notes to Consolidated Financial Statements (continued)


2. Acquisitions (continued)

In accordance  with APB No. 16, the purchase price was allocated to the tangible
and specifically  identified intangible assets acquired based upon the estimated
fair value of such assets. The fair value of software  development  projects and
customer  lists was  computed  based upon the future  cash flows  expected to be
generated by such projects.  The costs assigned to software development projects
related to products that had not yet reached  technological  feasibility and for
which the technology had no future alternative uses were expensed immediately as
in-process  research and  development.  The costs assigned to projects for which
technological  feasibility  had  been  achieved  is  being  amortized  over  the
remaining  life of the  respective  product,  which was  estimated at 18 months.
Customer lists are being amortized over their estimated life of 12 months.

The following  table presents the allocation of the purchase price to the assets
acquired:

         Customer lists                                       $354,389
         Software development                                  229,706
         Property, plant and equipment                          43,498
         In-process research and development                    36,933
         Accounts receivable                                    16,055
         Prepaid expenses                                          947
                                                         ----------------
                                                              $681,528
                                                         ================

The  operating  results of  Make-It-So,  Inc. are included in the  statements of
operations from the  acquisition  date forward.  The capitalized  customer lists
amortization expense was $147,662 for the year ended December 31, 1998. Research
and development  expense  includes $36,933 of acquired  in-process  research and
development   which  was   expensed  as  the   associated   products   were  not
technologically  feasible.  The  pro  forma  effect  of the  transaction  on the
Company's  revenues and net income if the transaction had occurred on January 1,
1996 is not significant.



<PAGE F-14>
                             ViaGrafix Corporation

                   Notes to Consolidated Financial Statements (continued)


3. Inventories

Inventories as of December 31 consist of the following:

<TABLE>
                                                                     1998             1997
                                                              ------------------------------------
<CAPTION>
<S>                                                                <C>               <C>        
         Finished goods                                            $   996,164       $   721,370
         Raw materials                                                 912,564           689,887
                                                              ------------------------------------
                                                                    $1,908,728        $1,411,257
                                                              ====================================
</TABLE>

4. Property, Plant and Equipment

Property, plant and equipment as of December 31 consists of the following:

<TABLE>
                                                                     1998             1997
                                                              ------------------------------------
<CAPTION>
<S>                                                                <C>               <C>        
         Land                                                      $   215,000       $   100,000
         Building and building improvements                          1,796,527         1,614,696
         Production equipment                                        2,011,689         1,309,148
         Automobiles                                                   221,291           183,016
         Furniture and fixtures                                        135,485            55,777
                                                              ------------------------------------
                                                                    $4,379,992        $3,262,637
                                                              ====================================
</TABLE>

5. Income Taxes

The components of the provision for income taxes for the years ended December 31
are as follows:

<TABLE>
                                                   1998              1997             1996
                                            ------------------------------------------------------
<CAPTION>
<S>                                                 <C>               <C>              <C>
         Current:
             Federal                                $201,427          $491,989         $ 534,839
             State                                   104,338           137,504            66,104
                                            ------------------------------------------------------
                                                     305,765           629,493           600,943

         Deferred:
             Federal                                  43,180           165,929          (122,718)
             State                                     5,337            20,508           (15,167)
                                            ------------------------------------------------------
                                                      48,517           186,437          (137,885)
                                            ------------------------------------------------------
                                                    $354,282          $815,930         $ 463,058
                                            ======================================================
</TABLE>


<PAGE F-15>
                             ViaGrafix Corporation

                   Notes to Consolidated Financial Statements (continued)


5. Income Taxes (continued)

A reconciliation  of the statutory  federal income tax rate to the provision for
income taxes for the year ended December 31 is as follows:
<TABLE>

                                                   1998              1997             1996
                                            ------------------------------------------------------
<CAPTION>
<S>                                                 <C>               <C>               <C>     
         Expected provision for
             federal income taxes
             at the statutory rate                  $544,234          $965,114          $386,776
         State income taxes - net of
             federal benefit                          63,387           112,407            45,048
         Income tax credits                         (153,379)         (282,602)                -
         Interest from tax-exempt
             municipal securities                   (130,261)                -                 -
         Other                                        30,301            21,011            31,234
                                            ------------------------------------------------------
         Provision for income taxes                 $354,282          $815,930          $463,058
                                            ======================================================
</TABLE>

Significant   components  of  the  Company's  deferred  income  tax  assets  and
liabilities as of December 31 are as follows:

<TABLE>
                                                                     1998             1997
                                                              ------------------------------------
<CAPTION>
<S>                                                              <C>                  <C>
         Deferred income tax assets:
             Accrued vacation                                    $           -        $    4,150
             Capitalized software                                      592,796           632,144
             Related party interest                                          -            78,147
             Accrued liabilities not deductible for tax                 66,564                 -
             Goodwill                                                   26,906            26,531
             Allowance for doubtful accounts                            57,165                 -
                                                              ------------------------------------
         Total deferred income tax assets                              743,431           740,972

         Deferred income tax liabilities:
             Tax over book depreciation                               (176,776)         (125,800)
                                                              ------------------------------------
         Net deferred income tax assets                               $566,655          $615,172
                                                              ====================================
</TABLE>



<PAGE F-16>
                             ViaGrafix Corporation

                   Notes to Consolidated Financial Statements (continued)

6. Long-Term Debt and Notes Payable

At December 31, 1997, the Company had two 7.5%  promissory  notes with principal
of $3,616,240 outstanding at December 31, 1997. This amount included $142,342 of
interest that was  reclassified as additional  principal in 1996. The notes were
payable in equal monthly installments over the term of the notes with all unpaid
principal  and interest due August 15, 2000.  All interest not paid when due was
considered  additional  principal.  The notes  were  equal in  priority  with no
discrimination  in favor of either  holder as to payments  or any other  actions
under the  promissory  notes.  The notes  were  repaid  with  proceeds  from the
Company's  initial  public  offering in March  1998.  An  additional  $44,760 of
interest was reclassified as additional principal in 1998 prior to the repayment
of the notes.

In December  1998,  the Company  issued a 5.0%  promissory  note for $103,500 to
purchase  land.  The note and unpaid  interest  is  payable  in June 1999.  This
transaction  has  been  accounted  for as a  noncash  transaction  in  the  1998
statement of cash flows.

7. Series A Convertible Preferred Stock

Prior to March 1998, there were 855,000 shares of Series A convertible preferred
stock  outstanding.  The holders of preferred  stock were  entitled to receive a
preferred  dividend at the  discretion of the Board of Directors,  and were also
entitled to a dividend equal to that of a common stock equivalent  dividend,  if
and when  declared  by the Board of  Directors.  The  holders  of each  share of
preferred  stock were  entitled  to the  number of votes per share  equal to the
number of shares of common stock into which each share was convertible. In March
1998,  all 855,000  shares of  preferred  stock  outstanding  were  converted to
488,571  shares of common  stock in  accordance  with the  Series A  Convertible
Preferred Stock Purchase  Agreement as a result of the Company's  initial public
offering.

8. Stock Option Plan

The Company has an incentive stock option plan (the "Plan") under Section 422(b)
of the Internal  Revenue  Code.  The Plan provides for the issuance of qualified
and  nonqualified  options to purchase  shares of common stock of the Company at
"fair  market  value,"  as  determined  by the Board of  Directors  prior to the
Company's  initial public offering in March 1998 and market price  subsequent to
March 1998, to selected qualified  employees and contractors,  respectively,  of
the Company. Options may be granted under the Plan at

<PAGE F-17>
                             ViaGrafix Corporation

                   Notes to Consolidated Financial Statements (continued)

8. Stock Option Plan (continued)

any time  prior  to  January  1,  2005.  Options  vest  and are  exercisable  as
determined by the Board of Directors on a  grant-by-grant  basis.  In 1997,  the
Board of  Directors  increased  the  number of shares of common  stock  which is
reserved  under the Plan from 285,714 shares to 1,000,000  shares.  The exercise
price per share is specified  separately in the Plan agreement  relating to each
option  granted  but can not be less  than the fair  market  value  per share of
common stock on the date of the grant.

Options transactions are as follows:
<TABLE>
                                                             Stock Options Outstanding
                                                                  and Exercisable
                                                   -----------------------------------------------
                                                                                     Weighted
                                                                                      Average
                                                                      Options        Exercise
                                                       Shares       Exercisable        Price
                                                   -----------------------------------------------
<CAPTION>
<S>                                                      <C>           <C>            <C> 
         Shares under option:
             Balance at December 31, 1995                179,572                      $  1.10
             Canceled                                    (30,114)                        1.05
             Exercised                                   (28,943)                        1.05
                                                   -----------------------------------------------
             Balance at December 31, 1996                120,515       94,206            1.12
             Granted                                     527,857                        11.13
             Canceled                                     (7,143)                        1.33
             Exercised                                   (29,252)                        1.12
                                                   -----------------------------------------------
             Balance at December 31, 1997                611,977       94,239            9.75
             Granted                                     320,000                         6.64
             Canceled                                    (29,537)                        8.67
             Exercised                                   (44,783)                        1.22
                                                   -----------------------------------------------
             Balance at December 31, 1998                857,657      144,290         $  9.07
                                                   ===============================================
</TABLE>



<PAGE F-18>
                             ViaGrafix Corporation

                   Notes to Consolidated Financial Statements (continued)


8. Stock Option Plan (continued)

Further  information  concerning the options outstanding at December 31, 1998 is
as follows:
<TABLE>

                                              Weighted
                                               Average        Weighted                        Weighted
                                              Remaining       Average                         Average
         Range of               Number          Life          Exercise        Options         Exercise
      Exercise Prices         of Options       (Years)         Price        Exercisable        Price
-----------------------------------------------------------------------------------------------------------
<CAPTION>

<S>                               <C>            <C>          <C>               <C>             <C>     
  $    .20 to $4.75               170,657         8.25        $  2.44           59,890          $  .99
  $   7.06 to $7.25               265,000        10.00        $  7.09                -               -
  $  13.00                        422,000        10.00        $ 13.00           84,400          $13.00
</TABLE>

At December  31, 1998,  26,794  common  shares were  reserved by the Company for
future option grants under the Plan.

Prior to March 1998,  each stock  option  exercise  price was set by  management
based on its best estimate of market value as of the date of grant.  As a result
of  negotiations  with  underwriters in connection with its initial public stock
offering in March 1998, management, for financial statement purposes, reassessed
the fair value of its common stock as of each grant date prior to March 1998 for
the purpose of determining the amount of unearned  compensation expense, if any,
under  APB  No.  25.  Based  upon  management's   revised  estimates,   unearned
compensation  of $180,835  related to the January 1997 stock  option  grants was
recognized in 1997 and is being  amortized over the five-year  vesting period of
the stock options  granted in 1997. The weighted  average  estimated fair market
value of the common stock at the grant date for the January  1997 stock  options
was $3.78.

SFAS No. 123 requires pro forma  information  regarding  net income and earnings
per share to be  determined  as if the Company has  accounted  for its  employee
stock  options  granted  subsequent  to  December  31, 1995 under the fair value
method of SFAS No. 123.  The fair value for these  options was  estimated at the
date of grant using a "minimum  value" option pricing model prior to the initial
public  offering  in  March  1998 and the  Black-Scholes  option  pricing  model
subsequent to March 1998. The following  weighted-average  assumptions  for 1998
and 1997 were used: risk-free interest rate of 6%; a

<PAGE F-19>
                             ViaGrafix Corporation

                   Notes to Consolidated Financial Statements (continued)


8. Stock Option Plan (continued)

dividend yield of zero; volatility of the expected market price of the Company's
common stock of 104% (1998 only) and a  weighted-average  expected  life of each
option of five years.

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 estimate, in management's
opinion,  the  existing  models do not  necessarily  provide a  reliable  single
measure of the fair value of its employee stock options. Using the Black-Scholes
option valuation model, the weighted average grant date value of options granted
during the year ended December 31, 1998 was $4.77 per option.

For purposes of pro forma  disclosures,  the estimated fair value of the options
is amortized to expense over the options'  vesting  period.  The  Company's  pro
forma information for the year ended December 31 is as follows:

<TABLE>
                                                     1998              1997            1996
                                              ----------------- ----------------- ----------------
<CAPTION>
<S>                                                <C>             <C>                 <C>     
         Pro forma net income                      $505,856        $1,960,612          $659,673
                                              ================= ================= ================

         Pro forma basic earnings
             per common share                        $.09              $.49             $.17
                                              ================= ================= ================

         Pro forma diluted
             earnings per common
             and common equivalent
             share                                   $.09              $.44             $.15
                                              ================= ================= ================
</TABLE>



<PAGE F-20>
                             ViaGrafix Corporation

                   Notes to Consolidated Financial Statements (continued)


9. Earnings Per Share

The following sets forth the computation of basic and diluted earnings per share
for the year ended December 31:
<TABLE>

                                                        1998            1997            1996
                                                  --------------- ---------------- ---------------
<CAPTION>
<S>                                                  <C>             <C>                <C>     
         Numerator:
             Net income                              $1,246,406      $2,022,642         $674,517
             Preferred stock dividend                         -         (57,162)               -
                                                  --------------- ---------------- ---------------
         Numerator for basic earnings
             per share - income available
             to common shareholders                   1,246,406       1,965,480          674,517

         Effect of dilutive securities -
             preferred stock dividend                         -          57,162                -
                                                  --------------- ---------------- ---------------
         Numerator for diluted earnings
             per share - income available
             to common shareholders
             after assumed conversions               $1,246,406      $2,022,642         $647,517
                                                  =============== ================ ===============

         Denominator:
         Denominator for basic
             earnings per share -
             weighted average shares *                5,640,044       3,859,443        3,831,360

         Effect of dilutive securities:
             Employee stock options                     201,934         149,575           84,808
             Series A convertible
                preferred stock                               -         488,571          488,571
                                                  --------------- ---------------- ---------------
         Dilutive potential common
             shares                                     201,934         638,146          573,379
                                                  --------------- ---------------- ---------------
         Denominator for diluted
             earnings per share -
             adjusted weighted-average
             conversions                              5,841,978       4,497,589        4,404,739
                                                  =============== ================ ===============
</TABLE>

          *  Adjusted for the 1 for 1.75 reverse stock split. See Note 1.



<PAGE F-21>
                             ViaGrafix Corporation

                   Notes to Consolidated Financial Statements (continued)


9. Earnings Per Share (continued)

<TABLE>
                                                        1998            1997            1996
                                                  --------------- ---------------- ---------------
<CAPTION>
<S>                                                     <C>             <C>              <C> 
         Basic earnings per share                       $.22            $.51             $.18
                                                  =============== ================ ===============

         Diluted earnings per share                     $.21            $.45             $.15
                                                  =============== ================ ===============
</TABLE>

10. Major Customers and Concentration of Credit Risk

The Company sells and markets,  primarily in the United  States and Canada,  its
training  products and software directly and through resellers and distributors.
Training  product sales for the years ended  December 31, 1998,  1997,  and 1996
were 83%, 81% and 69%,  respectively,  of total net sales. During the year ended
December 31, 1998,  approximately  29% of the  Company's  net sales were through
direct  sales and 71%  through  resellers,  major  retailers  and  distributors.
Approximately  29% and 17% of total net sales  were  with one  customer  for the
years ended December 31, 1998 and 1997,  respectively.  The Company did not have
any customers which individually  accounted for more than 10% of total sales for
the year ended December 31, 1996.

The Company does not require collateral from its customers. Its credit policy is
in  accordance  with  normal  industry  trade and credit  terms.  Credit  losses
relating to the Company's customers have not been significant.

11. Related Party Transactions

The 7.5% promissory  notes described in Note 6 were payable to two  shareholders
of the Company. The Company incurred $53,713,  $300,748 and $324,547 of interest
expense during the years ended December 31, 1998,  1997 and 1996,  respectively,
related to these promissory notes.



<PAGE F-22>
                             ViaGrafix Corporation

                   Notes to Consolidated Financial Statements (continued)


11. Related Party Transactions (continued)

In January 1997, the Company  entered into a developing and licensing  agreement
with Street  Technologies,  Inc., now known as 7th Street.com,  Inc.  ("Street")
pursuant to which Street agreed to pay royalties  for  networkable  sales of the
Company's  multimedia products and the Company agreed to pay royalties to Street
on networkable  licenses sold for multimedia  training products  developed using
Street products. For the years ended December 31, 1998 and 1997, Street paid net
royalties  excluding  the $620,000  prepayment  discussed  below of $291,846 and
$315,000,  respectively,  to the  Company.  The  president  and chief  executive
officer of Street is a director of the Company.

In 1998,  the Company  rented an airplane from an affiliate for use in traveling
to trade  shows and other  marketing  activities.  Total  costs  charged  by the
affiliate during the year ended December 31, 1998 was $36,813.

In  September  1998,  the  Company  paid  $620,000 to amend the  developing  and
licensing   agreement  with  Street  whereby  the  royalty  paid  to  Street  on
networkable  licenses sold for  multimedia  training  products  developed  using
Street  products  was reduced  through  September  30, 2000.  At that time,  the
Company has the option to pay an additional  $250,000 to reduce the royalty paid
on Street's products for the life of Street's products. The $620,000 payment was
capitalized  as prepaid  royalty  and  license  and is being  amortized  over 24
months.  Prepaid  royalty and license  amortization  expense was $77,500 for the
year ended December 31, 1998.

In July 1998,  the Company  issued a $188,000  note  receivable to an officer as
part of an  employment  agreement.  The note  receivable  is  secured by a first
mortgage on his residence, earns interest at 8% per annum and is payable monthly
with a balloon payment in July 2000.

12. Lease Commitments

The Company has noncancellable lease commitments relating to computer equipment.
The future minimum lease payments for all leases are as follows:

                      1999                        $13,434
                      2000                          5,396
                                             ------------------
                                                  $18,830
                                             ==================



<PAGE F-23>
                             ViaGrafix Corporation

                   Notes to Consolidated Financial Statements (continued)


12. Lease Commitments (continued)

The Company  incurred  $9,633,  $55,032 and $30,919 of rental expense during the
years ended December 31, 1998, 1997 and 1996, respectively.

13. Employee Benefit Plan

In  November  1997,  the Company  began a 401(k)  plan into which  participating
employees  can defer up to 15% of their  annual  compensation  up to a specified
limit. The Company matches 50% of each participating  employee's deferrals,  not
to exceed 6% of each participating  employee's annual compensation.  The Company
contributions  to the Plan for the years ended  December  31, 1998 and 1997 were
$82,563  and   $10,983,   respectively.   The  Company   does  not  provide  any
post-retirement benefits other than the 401(k) plan.

14. Legal Contingencies

On May 22,  1998,  a lawsuit was filed as a putative  class  action  against the
Company and certain of its officers and  directors  claiming  violations  of the
Securities  Act of 1933 for  alleged  misrepresentations  and  omissions  in the
Company's  prospectus issued in connection with its initial public offering made
in March 1998. The Company believes the lawsuit is without merit.

The Company is involved in various other claims and legal actions arising in the
ordinary  course of  business.  Management  does not believe  that the  ultimate
resolution  of these  matters  will  have a  material  effect  on the  Company's
financial position, results of operations or cash flows.

15. Subsequent Event

Subsequent to December 31, 1998, the Company settled a lawsuit filed in December
1998,  arising out of operations.  The amount of the settlement was $172,000 and
it is reflected in 1998 selling, general and administrative expenses.


<PAGE F-24>
                             ViaGrafix Corporation

                   Notes to Consolidated Financial Statements (continued)


16. Quarterly Financial Information (unaudited)

The quarterly  financial  information  is as follows (in  thousands,  except for
earnings per share data):
<TABLE>

                                                     First          Second          Third         Fourth
                                                    Quarter        Quarter         Quarter        Quarter
                                                 -------------- --------------- -------------- --------------
<CAPTION>
<S>                                                   <C>            <C>           <C>             <C>   
Year ended December 31, 1998:
    Sales                                             $4,077         $4,187        $4,017          $6,469
    Gross profit                                       3,103          3,197         3,216           4,689
    Income (loss) before taxes                           708            729           171              (7)
    Net income                                           537            502           157              50

Basic earnings per share                              $  .12         $  .08        $  .03          $  .01

Diluted earnings per share                            $  .11         $  .08        $  .03          $  .01

Year ended December 31, 1997:
    Sales                                              2,866          3,280         3,656           3,893
    Gross profit                                       2,129          2,468         3,060           2,995
    Income before taxes                                  642            646         1,132             419
    Net income                                           395            398           689             541*

Basic earnings per share                                 .09            .10           .18             .14

Diluted earnings per share                               .09            .09           .15             .12
</TABLE>

*    Net income is higher than income before taxes in the fourth quarter of 1997
     due to the  realization  of tax  credits for  1994-1997  as a result of the
     passage of the Taxpayer  Relief Act of 1997 in August  1997.  The amount of
     the credit was quantified and recorded in the fourth quarter of 1997.



<PAGE F-25>

                              ViaGrafix Corporation

                 Schedule II - Valuation and Qualifying Accounts


<TABLE>
                                               Balance at      Amounts                        Balance at
                                                Beginning      Charged                          End of
                 Description                    of Period     to Expense      Deductions        Period
-----------------------------------------------------------------------------------------------------------
<CAPTION>
<S>                                                <C>           <C>           <C>               <C>     
Year ended December 31, 1998:
    Allowance for doubtful accounts                $60,254       $118,962      $(31,502)(1)      $147,714
    Reserve for sales returns                            -        533,496             -           533,496

Year ended December 31, 1997:
    Allowance for doubtful accounts                      -        107,497       (47,243)(1)        60,254

Year ended December 31, 1996:
    Allowance for doubtful accounts                      -              -             -                 -
</TABLE>

(1) Uncollectible accounts written off, net of recoveries.


<PAGE 25>

Signatures

Pursuant to the  requirement of Section 13 or 15 (d) of the Securities  Exchange
Act of 1934, as amended, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, hereunto duly authorized on March 19, 1999.


ViaGrafix Corporation

By: /s/ Michael Webster
    -----------------------------
        Michael Webster
        Chairman of the Board of Directors, Chief Executive Officer,
        and President

Pursuant to the Requirement of the Securities  Exchange Act of 1934, as amended,
this  report has been  signed  below by the  following  persons on behalf of the
Registrant and in the capacities indicated on March 19, 1999.


By: /s/ Michael Webster
    -----------------------------     
        Michael Webster
        Chairman of the Board of Directors, Chief Executive Officer,
        and President

By: /s/ Robert Webster
    -----------------------------
        Robert Webster
        Executive Vice President, Secretary and Director

By: /s/ Robert Moore
    -----------------------------
        Robert Moore
        Treasurer and Chief Financial Officer
        (principal financial officer and principal accounting officer)

By: /s/ Roy Bliss
    -----------------------------
        Roy Bliss
        Director

By: /s/ Gerald Harris
    -----------------------------
        Gerald Harris
        Director


<PAGE 26>

Exhibit 10.2 Agreement with Robert Moore Regarding Change in Control

                                A G R E E M E N T

     AGREEMENT made and entered into effective the 1st day of January,  1999, by
and between ViaGrafix Corporation,  an Oklahoma corporation  ("ViaGrafix"),  and
Robert C. Moore, Jr. ("Bob"), as follows:

1.   In the  event  that  there is a change in  control  (as  defined  below) of
     ViaGrafix, ViaGrafix agrees that:
     (a)  If Bob is not offered a position with ViaGrafix of at least comparable
          responsibilities and compensation, he may, at any time thereafter upon
          thirty (30) days' written notice to ViaGrafix,  elect to (i) terminate
          his employment and receive severance pay equal to eighteen (18) months
          of his salary immediately prior to the change in control, (ii) require
          ViaGrafix to purchase his home (if any) or home site in Mayes  County,
          Oklahoma,  at its then fair market  value  and/or  (iii)  purchase the
          ViaGrafix  vehicle then  provided for his use at its current  N.A.D.A.
          loan  value;  and  all of  his  stock  options  with  ViaGrafix  shall
          immediately  vest and shall be  exercisable  by Bob at any time within
          twelve (12) months after his termination of employment from ViaGrafix.
     (b)  Bob  shall  have the same  rights  as  specified  in (a)  above if his
          employment  with  ViaGrafix is  terminated  thereafter  by  ViaGrafix,
          unless such termination is for "cause".  "Cause" means being convicted
          of a felony, drug or alcohol abuse or dereliction of duties.
2.   A "change in control"  shall  occur  when,  by reason of a sale of stock or
     assets, merger or other business combination, Michael A. Webster and Robert
     E.  Webster  no  longer  have  effective  control  over  ViaGrafix  or  the
     designation of nominees to its Board of Directors.
3.   This agreement  shall be binding on and inure to the benefit of the parties
     hereto and their respective heirs, personal representatives, successors and
     assigns.

IN WITNESS  WHEREOF,  the parties  hereto have executed this Agreement as of the
date first above shown. ViaGrafix Corporation

                                    By: /s/ Mike Webster
                                        -----------------------------
                                            Mike Webster, President

                                        /s/ Robert C. Moore, Jr.
                                        -----------------------------
                                            Robert C. Moore, Jr.


<PAGE 27>

Exhibit 21.1  Subsidiaries of the Registrant

Make It So, Inc.
ViaKids, Inc.
American Small Business Computers, Inc.
DesignCAD, Inc.

<PAGE>

Exhibit 23.1 Consent of Ernst & Young LLP, Independent Auditors


                         CONSENT OF INDEPENDENT AUDITORS




We consent to the incorporation by reference in the Registration Statement (Form
S-8 No.  333-59591)  pertaining  to the  1995  Stock  Option  Plan of  ViaGrafix
Corporation of our report dated March 19, 1999, with respect to the consolidated
financial  statements  and  schedule of  ViaGrafix  Corporation  included in the
Annual Report (Form 10-K) for the year ended December 31, 1998.



                                                     /s/ERNST & YOUNG LLP


Tulsa, Oklahoma
March 22, 1999