<TABLE>
<CAPTION>

<S> <C>
                                 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, 1997   Commission file number 0-19492

                            nVIEW CORPORATION
             (Exact name of registrant as specified in its charter)

        Virginia                                                    54-1413745
(State or other jurisdiction of                                (I.R.S. Employer
incorporation or organization)                                 Identification No.)

                860 Omni Boulevard, Newport News, Virginia 23606
    (Address of principal executive office)                      (Zip Code)

       Registrant's telephone number, including area code: (757) 873-1354

             Securities registered pursuant to Section 12(b) of the
              Act: None Securities registered pursuant to Section
                               12(g) of the Act:
                        Common Stock, without par value.
                                (Title of Class)

</TABLE>

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 Regulations 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. [X]

The aggregate market value of the voting stock held by non-affiliates of the
registrant based upon the closing sale price as reported in The Wall Street
Journal on February 27, 1998, was $4,271,486. For the purpose of the foregoing
calculation only, all directors and executive officers of the registrant have
been deemed affiliates.

                    APPLICABLE ONLY TO CORPORATE REGISTRANTS

Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date: 5,005,166 shares of Common
Stock on February 27,1998.



                                       1

<PAGE>



                               nVIEW CORPORATION

                       Annual Report on Form 10-K for the
                      Fiscal Year Ended December 31, 1997


                               Table of Contents


<TABLE>
<CAPTION>

PART I                                                                                          Page

<S> <C>

Item 1                 Business                                                                    3
Item 2                 Properties                                                                  6
Item 3                 Legal Proceedings                                                           7
Item 4                 Submission of Matters to a Vote
                         of Security Holders                                                       7

PART II

Item 5                 Market for Registrant's Common Equity
                         and Related Stockholder Matters                                           7
Item 6                 Selected Financial Data                                                     8
Item 7                 Management's Discussion and
                         Analysis of Financial Condition and
                         Results of Operations                                                    10
Item 8                 Financial Statements and
                         Supplementary Data                                                       16
Item 9                 Changes in and Disagreements with
                         Accountants on Accounting and
                         Financial Disclosure                                                     16


PART III

Item 10                Directors and Executive Officers
                         of the Registrant                                                        17
Item 11                Executive Compensation                                                     18
Item 12                Security Ownership of Certain
                         Beneficial Owners and Management                                         20
Item 13                Certain Relationships and
                         Related Transactions                                                     21

PART IV

Item 14                Exhibits, Financial Statement Schedule,
                         and Reports on Form 8-K                                                  21


                                       2

<PAGE>



                                     PART I

Item 1.           Business

         Certain statements in this Form 10-K are forward-looking in nature and
involve risks and uncertainties. Investors are cautioned that the Company's
actual results could differ materially from those anticipated in these
forward-looking statements as a result of certain factors discussed herein. The
Company makes forward-looking statements relating to new markets, anticipated
gross margins, new product introductions, year 2000 issues, and availability of
products manufactured on behalf of the Company. Factors that could cause actual
results to differ from those in the forward looking statements include, but are
not limited to, the following: (1) uncertainties relating to the impact of
competitive pricing, competitive products and market acceptance and demand for
the Company's current products and new product introductions; (2) uncertainties
relating to new technologies, availability of components, dependence on third
party suppliers, and manufacturing capabilities; (3) new markets for the
Company's products - the Company's product in development, the P1500
Professional Series projector, is designed specifically for the professional
market, with applications in professional video, rental and staging, and home
theater environments. There can be no assurance that the product will be
successful in these markets.

         In addition, the Company makes forward looking statements regarding its
ability to fund future operations through cash flow and borrowings under a new
Loan and Security Agreement (the "Agreement") with a financial institution.
Several factors may cause actual results to differ including, but not limited
to, reduced sales due to the above described factors, difficulty collecting its
accounts receivable, reduction in the amount available for borrowing under the
loan as that amount is based on a formula applied to eligible receivables as
defined by the lender, and shift in sales volume to foreign sales, which sales
are not included as eligible receivables for calculating the borrowing base
under the Loan Agreement.

General

         nVIEW Corporation ("nVIEW" or the "Company"), a Virginia corporation
founded in 1987, designs, manufactures and markets projection systems
incorporating electronic image display technologies, including liquid crystal
display ("LCD") and Digital Light Processing(TM) ("DLP(TM)") subsystems to
project large, high quality images from a variety of computer and video sources.

         The Company's projection systems allow audiences to view computer and
video images in group settings and to interact with these images in real time.
The products are used in business, education, entertainment and other settings
to facilitate group communication. The Company previously designed and produced
projection panels for use in conjunction with an overhead projector, and now
produces projectors incorporating the light source, optical path and imaging
component in one product. The market for projection panels diminished as the
volume and variety of projectors increased and, therefore, the Company no longer
develops and manufactures the panel products.

                                       3

<PAGE>

Technology

         The Company designs electronic drivers and controls, some of which are
manufactured to the Company's specifications by other manufacturers, to drive
products using LCD and DLP imaging systems. Through ongoing research and
development, the Company actively pursues advancements in imaging technologies,
to enhance the performance of existing products and the development of new
products.


                                       4

<PAGE>



Products

          The Company's projection systems are compatible with most personal and
desktop computers on the market.

         Projectors:

         nVIEW DIAMOND Series - The DiaMonD Series of projectors incorporates
the DLP subsystem developed by Texas Instruments Incorporated. This reflective
imaging technology projects bright, clear images with high contrast ratios,
absolute picture uniformity, and full color from the middle to all edges of the
projected image. All projectors in the series include a motorized zoom lens,
built-in control panel and an infrared remote allowing full computer mouse
control, as well as controls for source selection, brightness, contrast, volume,
curtain and power. The projectors accept up to four source connections
simultaneously, two computer and two video (video available only on models
supporting video images).
o        The D700 displays data only images at 700 lumens in 800 x 600 (SVGA)
         resolution and resized resolutions from 640 x 480 (VGA) up to 1024 x
         786 (XGA), and is video upgradeable.
o        The D705 displays data and video images at 700 lumens in 800 x 600
         (SVGA) resolution and resized resolutions from 640 x 480 (VGA) up to
         1024 x 768 (XGA).

         nVIEW L-600 Series - The L-600 Series of multimedia projectors utilizes
three 0.9" polysilicon LCDs. The projectors weigh just 11 pounds, display up to
16.7 million colors, and feature a PC card slot, allowing the presenter to store
and display presentations without connecting a desktop or laptop computer. Other
features include a manual zoom lens, a built-in control panel and an infrared
remote, allowing wireless control of source selection, brightness, contrast,
volume, curtain and lamp on/off functions. One computer and one video source may
be connected simultaneously.
o        The L-605 projects data and video at 450 lumens in 800 x 600 (SVGA)
         resolution and displays resized resolutions from 640 x 480 (VGA) up to
         1024x768 (XGA).
o        The L-600 projects data only in 800x600 (SVGA) resolution, and resized
         images from 640 x 480 (VGA) up to 1024 x 768 (XGA) resolution at 450
         lumens, and is video upgradeable.

         nVIEW L-800 Projector - The L-800 Projector is a true XGA (1024 x 768)
resolution projector, using three 1.3" polysilicon LCDs to display 16.7 million
colors at 650 lumens. Features include power zoom and power focus of the
automatically retracting lens, and lens shift capability to raise or lower the
image up to 10 degrees without keystone effect. The projector has "picture in
picture" capability, allowing the presenter to run a video image inside a
computer presentation. Controls are available through either the on-board
control panel or the infrared remote. Image resizing capability allows the
projector to display resolutions from 640 x 480 (VGA) through 1280 x 1024
(SXGA).

                                       5

<PAGE>

         New Products and Products in Development

         The Company is currently developing the first product in its new series
of projectors, the nVIEW Professional Series. The P1500 is the Company's first
product developed specifically to target the high end fixed installation
projector market, and is expected to be available in the second quarter of 1998.
Features of the product include true XGA (1024 x 768) resolution, and a modular
design allowing the end user to select the exact configuration appropriate for
the application and to upgrade the product as new features and capabilities
(such as HDTV, SXGA resolution, etc.) become available. Professional quality
video capability will be available by configuring the projector to include
technology by Snell & Wilcox Limited, with which the Company has a joint
development agreement.

         The Company can provide no assurance that this product will be
completed or, if completed, will achieve market acceptance.


                                       6

<PAGE>



Sales, Marketing and Distribution

         nVIEW has developed and supports a worldwide distribution network with
the ability to demonstrate and sell the Company's products to a wide range of
end users, primarily through dealers, distributors, and presentation
specialists. Sales representatives are located throughout the US, in Europe and
in Latin America. The Company is pursuing new channels of distribution, in
addition to its existing customers, in preparation for the introduction of the
nVIEW Professional Series projectors. New potential markets include but are not
limited to, professional video environments, rental and staging applications,
and home theater environments.

         The Company's sales by geographic region for each of the years ended
December 31, 1997, 1996 and 1995 are summarized in Note 11 of the Notes to the
Company's Consolidated Financial Statements contained elsewhere in this Report.

Customer Service

         The Company has established a customer service and support department
that provides telephone support, technical training and hardware repair to
distributors, dealers and end users. The Company's products are typically
covered by a one-year warranty for parts and labor (excluding bulbs) from the
date of sale to the end-user. Non-warranty work is guaranteed for 90 days. The
Company performs warranty and repair service at its headquarters and through
Authorized Service Centers located worldwide.

Manufacturing and Supply

         During 1997 the Company received its Certificate of Registration to ISO
9001 standards, indicating the Company has documented its quality management
standards, has provided objective evidence that it follows such standards, and
has successfully completed a registration audit of its Quality Management System
by an independent auditing agency. The Company is subject to continuing audits
in order to maintain its registration to ISO 9001 standards.

         The principal components of the Company's products are LCD and DLP
subsystems, case parts, and electronic subassemblies. The Company procures and
tests parts manufactured to the Company's specifications and delivers certain
electronic components to its subcontractors for subassembly. The Company
contracts with high quality, competitive component manufacturers, and then
performs final assembly and testing in its Newport News, Virginia facility.

         The Company's L-600 and L-800 series of LCD polysilicon projectors are
manufactured for the Company through a single supplier. Should the supplier be
unable to provide the Company with these products, the Company's future results
of operations could be materially affected.

         The Company purchases LCD subsystems from a single supplier. The
supplier also manufactures and markets LCD projection products in competition
with those manufactured by nVIEW. Should the supplier be unable or unwilling to
provide the Company with these subsystems, the Company would seek an alternate
source of supply, possibly requiring product redesign and/or delays in product
delivery, which could materially affect the Company's future results of
operations.

                                       7

<PAGE>
         A key component of the professional video version of the Company's new
Professional Series product is available from a single supplier, Snell & Wilcox,
with which the Company has a joint development agreement and a supply agreement.
Should this component be unavailable or available only in limited quantities,
the Company's future results of operations could be materially effected.

         The Company normally ships products immediately upon receipt of an
order, consistent with product availability, except when a specific delivery
date beyond that is requested by the customer. Due to the modular design, custom
configuration concept of the nVIEW Professional Series projectors, it is
anticipated products in that series will be completed upon receipt of an order.

Competition

         nVIEW believes the ability to compete in the high-end and fixed
installation projection products market depends on certain key product
characteristics including image quality, resolution and brightness, feature
options, ease of operation and price. Size and weight are also significant
factors in the portable projector market, in addition to the other factors noted
above.

         The Company faces competition from established competitors and expects
significant additional competition as new technologies, applications and
products are introduced, and as more competitors enter the market. Most of the
Company's competitors have significantly greater financial, technical and
marketing resources than nVIEW. In the portable and conference room markets
major competitors include but are not limited to, InFocus Systems, Seiko-Epson,
Proxima, Sharp, ASK, Davis, Sony, Sanyo, Panasonic and Hitachi. In the high end
and fixed installation market, competitors include InFocus Systems, Sanyo, Sony,
Mitsubishi, Electrohome, AmPro and Barco.

Research and Development

         The Company recognizes the importance of research and development to
its success in the marketplace. Research and development expenses were
approximately $1,918,000, $1,994,000, and $4,704,000 for the years ended
December 31, 1997, 1996 and 1995, respectively. The higher research and
development expenses in 1995 primarily related to the development of the DLP
based projector series and the nFINITY projector.

Employees

         The Company currently employs 80 employees, with 18 engaged in
engineering, 21 in manufacturing, 14 in sales and marketing, 6 in customer
service and 21 in finance and administration. The Company's employees are not
represented by any collective bargaining organization and nVIEW has never
experienced a work stoppage.

Patents, Licenses and Trademarks

         nVIEW attempts to protect its intellectual, trade and published
property through the use of patents, trademarks, copyrights and other prudent
protection means. The Company requires employees, and consultants to execute
confidentiality agreements.

                                       8

<PAGE>

         Since its inception, the Company has actively sought patent protection
for a number of inventions and processes believed to be important to certain
business goals. The Company currently holds several patents in the United
States, with corresponding protection typically sought in Japan, Taiwan, Korea
and the 17 member countries of the European Patent Office.

         While the value of individual patents vary, the Company believes other
factors, such as speed of product development, access to emerging technologies
and accurate market research may be of equal or greater importance in
maintaining its technology and/or competitive position.

Item 2.           Properties

         The Company's facility is located in Newport News, Virginia and
consists of approximately 34,700 square feet of office, light manufacturing and
storage space. This space is leased in accordance with a lease agreement
expiring in December 2002.





         Financial commitments under the Company's leases are summarized in Note
5 of the Notes to the Consolidated Financial Statements contained in this
report.

Item 3.           Legal Proceedings

         The Company is not a party to any material legal proceedings. However,
the Company may from time to time, in the ordinary course of business, become
involved in legal proceedings.

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

         No matters were submitted to a vote of security holders of the Company
through the solicitation of proxies or otherwise during the fourth quarter of
the fiscal year ended December 31, 1997.

                                    PART II

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

         The Company's Common Stock is traded in the over-the-counter market and
is quoted on the National Association of Securities Dealers Automated Quotation
National Market System ("Nasdaq/NM") under the symbol NVUE. The Nasdaq/NM high
and low closing sales prices are set forth in the following table. The Nasdaq/NM
prices reflect inter-dealer quotations, without retail mark-up, mark-down or
commission and do not necessarily represent actual transactions.

                                       9
<PAGE>


                     NASDAQ/NM - CLOSING SALES PRICES - PER SHARE


</TABLE>
<TABLE>
<CAPTION>

                                     1997                                  1996
                             High            Low                   High             Low
                             ----            ---                   ----             ---

<S> <C>

First Quarter                   $4-5/8        $2-13/16                 $4-1/2          $3-1/8
Second Quarter                   2-7/8         1-13/16                 9-7/16           4-1/4
Third Quarter                    2-1/4          1-7/16                  6-5/8           3-7/8
Fourth Quarter                   1-7/8           13/16                  6-3/8           2-7/8

</TABLE>

         On February 27, 1998, there were 304 holders of record of the Company's
Common Stock. Because many of such shares are held by brokers and other
institutions on behalf of shareholders, the Company is unable to estimate the
total number of shareholders represented by these record holders.

         Since the Company first registered its shares for sale to the public in
1991, it has not paid cash dividends and has retained any available earnings to
finance research and development and operations. During February 1998, the
Company entered into a loan and security agreement with a lending institution
which prohibits distributions to shareholders. The Company will be prohibited
from making distributions to shareholders as long as the loan and security
agreement is in place.

         The Nasdaq Stock Market instituted new initial and continued listing
requirements, effective February 23, 1998. The Company has been notified that it
is not in compliance with one of the continued listing requirements for the
Nasdaq National Market and is evaluating steps to bring the Company into
compliance and is researching alternative trading mechanisms.

                                       10

<PAGE>



Item 6.  Selected Financial Data

         The selected data presented below under the captions "Statements of
Operations Data" and "Balance Sheet Data" as of and for each of the years in the
five year period ended December 31, 1997, are derived from the consolidated
financial statements of nVIEW Corporation and subsidiaries, which have been
audited by KPMG Peat Marwick LLP, independent public accountants. The
consolidated financial statements as of December 31, 1997 and 1996, and for each
of the years in the three-year period ended December 31, 1997, and the
independent auditors' report thereon, are included elsewhere herein.

<TABLE>
<CAPTION>

                                                                         Years ended December 31,
                                          ---------------------------------------------------------------------------------------
                                                1997               1996              1995             1994              1993
                                          ----------------    --------------     -------------    -------------    --------------
                                                                   (in thousands, except per share data)
                                                              --------------     -------------    -------------    --------------

<S> <C>

Statements of Operations Data:
Sales                                              $19,883           $34,525           $32,876          $35,870           $33,555
Cost of good sold                                   21,575            27,469            26,794           23,272            21,728
                                          ----------------    --------------     -------------    -------------    --------------

   Gross profit                                    (1,692)             7,056             6,082           12,598            11,827
                                          ------------------- --------------     -------------    -------------    --------------

Operating expenses:
 Marketing and promotion                             3,253             3,688             6,841            5,194             7,689
 Research and development                            1,918             1,994             4,704            2,998             2,064
 General and administrative                          2,279             2,072             2,369            2,358             2,234
 Restructuring charge                                    -                 -                 -                -               433
 Litigation expense                                      -                 -                 -              127               353
 Insurance reimbursement of
   litigation expense                                    -                 -                 -            (550)                 -
                                          ----------------    --------------     -------------    -------------    --------------
 Operating expenses                                  7,450             7,754            13,914           10,127            12,773
                                          ----------------    --------------     -------------    -------------    --------------

   Earnings (loss) from operations                 (9,142)             (698)           (7,832)            2,471             (946)

Other income (expense):
 Interest expense                                    (191)             (191)             (113)             (41)              (55)
 Interest income                                        57               104               132              344               344
 Miscellaneous                                        (33)              (20)                 1                -               (3)
                                          ----------------    --------------     -------------    -------------    --------------
                                                     (167)             (107)                20              303               286
                                          ----------------    --------------     -------------    -------------    --------------

Earnings (loss) before income taxes                (9,309)             (805)           (7,812)            2,774             (660)
Income tax expense (benefit)                             -                 -              (35)              234                 -
                                          ----------------    --------------     -------------    -------------    --------------

Net earnings (loss)                               ($9,309)            ($805)          ($7,777)           $2,540            ($660)
                                          ================    ==============     =============    =============    ==============
Net earnings (loss) per share - basic              ($1.86)           ($0.16)           ($1.59)            $0.52           ($0.13)
                                          ================    ==============     =============    =============    ==============
Weighted average common shares
outstanding                                          5,005             4,942             4,899            4,885             4,946
                                          ================    ==============     =============    =============    ==============
Net earnings (loss) per share - diluted            ($1.86)           ($0.16)           ($1.59)            $0.51           ($0.13)
                                          ================    ==============     =============    =============    ==============
Weighted average common and                          5,005             4,942             4,899            4,953             4,946
potentially dilutive shares outstanding
                                          ================    ==============     =============    =============    ==============

                                       11

<PAGE>


                                                                               December 31,
                                          --------------------------------------------------------------------------------------
                                               1997                1996              1995             1994             1993
                                          ---------------     ---------------    -------------    -------------    -------------
                                                                              (in thousands)
                                                              ---------------    -------------    -------------    -------------
Balance Sheet Data:
Working capital                                    $7,409             $16,309          $16,125          $22,235          $19,785
Total assets                                        9,966              24,182           21,587           32,430           28,095
Shareholders' equity                                7,993              17,302           17,542           25,259           22,848

</TABLE>

                                       12

<PAGE>



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


Results of Operations

Fiscal Year 1997 Compared with Fiscal Year 1996

Sales decreased 42% to $19.9 million in 1997 from $34.5 million in 1996. For the
first six months of 1997, quarterly sales averaged $6.2 million, while for the
second six months of the year, quarterly sales averaged $3.8 million; a
reduction of 39%. The Company believes that future quarterly sales will continue
at or below the average for the second six months of 1997, until it begins
shipping the new P1500 projector series.

The significant decrease in sales in 1997 was caused by declining sales of the
Company's DLP projectors, a portion of which was due to reduced sales under the
Company's original equipment manufacturing agreement with Polaroid Corporation.
DLP projector sales under this agreement represented $3.3 million in 1997
compared to $7.0 million in 1996. This contract ended under its terms in the
third quarter of 1997. Non-Polaroid DLP projector sales declined in 1997 by $3.1
million from 1996. Overall, the loss of market share in the Company's
traditional audio visual ("AV") distribution channels, on a worldwide basis,
resulted in the 1997 sales decline. Management believes that this continuing
trend is caused by the following factors:

a.       rapid technological changes are shortening product lives and creating
         excess inventories;
b.       excess inventories are forcing significant reductions in the average
         selling prices of projectors to more quickly reduce inventory levels;
c.       an increased number of competitors are producing products with improved
         features over those available in the Company's DLP projector series,
         thereby reducing volumes sold.

Additionally, the limited credit capacity and unfavorable credit history of
certain international customers is negatively impacting volumes sold.

Further declines in 1997 sales resulted from a $7.4 million reduction in LCD
panel product sales in 1997 from 1996, as the industry shifted away from
projection panels and toward portable projectors. The Company no longer develops
LCD projection panel products, and will continue to sell the remaining inventory
of such products until depleted.

During 1997, the Company exited the computer distribution channel, due to the
high marketing expenses associated with the distributor contracts. As a result,
sales to computer distributors decreased by $1.5 million in 1997 compared to
1996. No future sales are anticipated in this channel.

In 1997, the Company continued to sell custom products, consisting of flat panel
monitors and related items. Sales in this product line were $2.0 million in 1997
and $2.2 million in 1996. As the Company transitions into new vertical markets
with the P1500 projector series, future sales of non-projector products are
expected to decline.

The combined effect of the non-renewal of the Company's OEM agreement with
Polaroid, exiting the computer distribution channel, the decline in LCD panel
product sales and anticipated decline in custom product sales will reduce future
annual sales by approximately $6 million or 30% of 1997 sales. The Company
intends to offset this decline with new shipments of the P1500 projector series
scheduled for release in the summer of 1998.

The Company's gross profit margin declined to a negative 9% in 1997 from 20% in
1996, due in

                                       13

<PAGE>



part, to the declining average selling prices explained above. However, a
majority of the negative margin was the result of a $4.4 million write-down of
inventory to net realizable value.

The Company is also experiencing higher cost of sales due to idle capacity in
its manufacturing facility, caused by lower production levels in response to the
decline in sales volumes during the second half of 1997. This idle capacity will
continue until the production of the new P1500 projector commences.

The Company's 1997 gross profit was also impacted by the approximately 18% of
1997 sales of product purchased from Matsushita Corporation and sold under the
nVIEW label at lower gross profit margins than are achieved from proprietary
products. The Company intends to include this product offering in the future
because such sales require no research and development costs, thereby offsetting
the lower gross profit margins.

Until the Company has completed its transition into new vertical markets,
existing product sales will continue to generate at or near break-even gross
margins.

Operating expenses decreased  4% in 1997 to $7.5 million, from $7.8 million in
1996.

Marketing and promotion expenses decreased 12% to $3.3 million in 1997 from $3.7
million in 1996. Increased product reliability surrounding the DLP projector
series in 1997 resulted in lower overall warranty expense. Additionally, sales
commissions decreased in response to lower sales in 1997 verses 1996. As a
result of the Company's exit from the computer distribution channel, related
marketing expenses declined proportionately. During 1998, management believes
marketing and promotion expenses will increase to support the product launch of
the new P1500 projector.

Research and development expenses decreased 4% to $1.9 million in 1997 from $2.0
million in 1996. However, in the second six months of 1997, research and
development expenses increased from the comparable period of 1996. This
fluctuation is the result of increased development costs relating to the
Company's new P1500 projector series targeted for new vertical markets and
expected to be released during 1998. As a result, management will allow
controlled increases in research and development expenses in 1998 to develop
this new product.

General and administrative expenses increased 10% to $2.3 million in 1997 from
$2.1 million in 1996. The majority of this increase was the expense associated
with increasing the Company's allowance for doubtful accounts.

The Company must generate quarterly sales higher than the average quarterly
sales for the second six months of 1997 in order to cover its current level of
operating expenses. Until the Company begins shipping the new P1500 projector
series, it expects to continue to experience net operating losses.

Other expenses increased 56% to $167 thousand in 1997 from $107 thousand in
1996. This net change consisted of lower earned interest income in 1997 as a
result of lower overall cash balances. Additionally, a nominal amount of losses
from fixed asset disposals was recorded as a result of the Company's closing of
its European sales office in the fourth quarter of 1997. Expenses and payments
associated with the Company's prior loan agreement are included here.

No income tax expense was recorded for the year ended December 31, 1997 or 1996.
The Company's cumulative net operating loss carryforward at December 31, 1997 is
approximately $11 million.



                                       14

<PAGE>



Fiscal Year 1996 Compared with Fiscal Year 1995

Sales increased 5% to $34.5 million in 1996 from $32.9 million in 1995. The
majority of the increase was achieved in the fourth quarter of 1996 with sales
of $11.2 million, the highest quarterly sales in the Company's history. For the
first nine months of 1996, sales were at levels below the comparable period of
1995. The sharp increase in the fourth quarter of 1996 resulted from sales of
the SVGA zoom focus model of the DLP projector which was introduced in the third
quarter of 1996. Contributing to the SVGA DLP projector sales was an original
equipment manufacturer (OEM) agreement with Polaroid Corporation signed during
the third quarter of 1996. Also contributing to the SVGA DLP projector sales was
increased demand from existing European and Pacific Rim customers, as well as
expanded distribution in these countries. Sales outside of the United States
(US), including sales to Polaroid Corporation, were $16.4 million or 48% of 1996
sales compared to $9.5 million or 29% of 1995 sales.

Although favorably accepted in the European and Pacific Rim countries, the SVGA
DLP projector was not received as favorably in the US. US sales were $18.1
million or 52% of 1996 sales compared to $23.4 million or 71% of 1995 sales. The
decrease in US sales began early in 1996 and intensified throughout the year, as
new competitors entered the projection market and new product introductions
increased pricing pressures on the Company's products, particularly VGA
resolution products.

The Company also experienced decreased demand for its LCD panel products, which
accounted for 29% of 1996 sales verses 63% of 1995 sales. Management believes
sales of LCD panels will continue to decline in absolute dollars and as a
percentage of total sales.

Increased sales through US distributors were achieved in 1996, although below
management's expectations. The entry into this channel occurred late in 1995.
Consistent with the Company's goal of reducing operating expenses and returning
to profitability, the Company was unable to commit an appropriate level of
resources for marketing and promotion to increase demand in the distribution
channel during 1996.

During 1996, management re-defined the products and partners in the Company's
nonprojection product lines. This decision resulted in the loss of certain low
volume customers. Management intends to focus on products that it believes will
ultimately result in higher volume, higher margin opportunities, where the
projected return on the research and development investment is appropriate.

Gross profit as a percentage of sales was 20% and 18% for 1996 and 1995,
respectively. Among other things, the 18% profit in 1995 was attributable to a
$2.8 million write down of certain inventory to estimated net realizable value.
Had this write down not occurred, 1995 gross profit would have been 27%.

In 1996, the Company's gross profit percentage decreased from a high of 26% for
the quarter ended June 30, 1996 to a low of 17% for the quarter ended December
31, 1996. Several factors caused this decrease in gross profit in 1996. First,
the Company entered into OEM agreements which typically generate lower sales
prices than sales of the Company's branded products. Second, increased pricing
pressure resulting from the entry of new competitors into the projection market,
as well as the number of new competitive products in the market for the
Company's branded products, resulted in decreased sales prices. Third, the
Company purchased the L-500 projector series from a supplier and marketed it
under the nVIEW label, resulting in both lower operating costs as well as lower
profits. Lastly, the Company continued to sell older, more mature products at
reduced prices.



                                       15

<PAGE>



Operating expenses decreased 44% to $7.8 million (22% of sales) in 1996 from
$13.9 million (42% of sales) in 1995. Overall, 1996 operating expenses decreased
significantly due to management's implementation of significant cost reduction
measures.

Marketing and promotion expenses decreased 46% to $3.7 million (11% of sales) in
1996 from $6.8 million (21% of sales) in 1995. In 1995, significant marketing
and promotion dollars were spent to support the anticipated launch of the DLP
projector. In 1996, management's overall plan to improve the Company's
performance, which included targeted expense reduction, resulted in decreased
marketing and promotion expenses, consisting primarily of outside advertising
agency costs, print advertising and other promotional expenditures. The decrease
in advertising was consistent with the Company's entrance into OEM selling
arrangements, which require only limited marketing and promotional support
costs.

Research and development expenses decreased 58% to $2.0 million (6% of sales) in
1996 from $4.7 million (14% of sales) in 1995. The decrease was primarily
related to the timing of new product development. In 1995, the nFINITY and the
Z350 products were designed and introduced, and the nFINITY was redesigned later
in the year. Additionally, the Company performed substantially all development
related to the first projector utilizing DLP subsystems in 1995. In 1996, the
D400 series was successfully introduced to market with minimal additional
development investment. Furthermore, the Company introduced the L-500 series of
projectors in 1996 which were manufactured by a supplier and private labeled by
the Company. As a result, minimal research and development dollars were incurred
internally.

General and administrative expenses decreased 13% to $2.1 million (6% of sales)
in 1996 from $2.4 million (7% of sales) in 1995. The majority of the decrease
was caused by management's decision to reduce the outsourcing of certain
services as well as a decrease in executive compensation.

Other expense was $107 thousand at December 31, 1996, compared to other income
of $20 thousand at December 31, 1995. The net decrease reflected increased
interest expense under the Company's borrowing agreement with a bank. The
interest expense primarily consisted of non-performance fees and the
amortization of loan origination costs.

No income tax expense was recorded for the year ended December 31, 1996 compared
to a $35 thousand benefit in 1995. On both a pre-tax and after-tax basis, the
Company incurred losses of $805 thousand in 1996 and $7.8 million in 1995. The
amount of the net operating loss carryforward at December 31, 1996 was
approximately $4.1 million.

Liquidity and Capital Resources

Cash balances on hand at December 31, 1996 as well as cash generated from
accounts receivable collections during 1997 were sufficient to fund operations
in 1997.

In 1998, the Company's needs for capital will include not only paying on-going
operating expenses, but also funding letters of credit in favor of at least two
key component suppliers. As part of the Company's plans to enter new vertical
markets with the P1500 projector, capital will also be required to fund initial
"ramp up" purchases of the key components used to build the P1500. ln addition,
the Company will require cash resources of approximately $400 thousand to
purchase tooling and test equipment to support the P1500. These combined needs
will be funded through existing cash balances, future accounts receivable
collections and the Company's line of credit (subject to the availability
described below). The Company believes such sources will be adequate to meet the
needs described herein. However, there can be no assurance that these sources of
funds will be sufficient.


                                       16

<PAGE>



The Company's sales are generated from a relatively small number of products. In
addition, the markets in which the Company competes are characterized by rapidly
changing technology, requiring constant product innovation. Most of the
Company's existing products are at or near the end of their respective product
life cycles. The Company is currently in the process of developing a new product
line, which is expected to be available for sale in the second quarter of 1998.
Although management believes that this new product line will gain acceptance in
the marketplace and will provide the Company access to new markets, there can be
no assurance that the new product line will be completed on a timely basis or
that the products will be accepted in the marketplace. Lack of acceptance of the
new product line, especially in light of the age of the Company's existing
products, could have a material adverse effect on the Company's results of
operations and financial position.

At December 31, 1997, the Company was under a forbearance agreement with its
lender. On February 23, 1998, the Company terminated the $2.5 million line of
credit to which the forbearance agreement related and simultaneously entered
into a new loan and security agreement which is described below. There were no
amounts outstanding under the terminated credit agreement as of the termination
date.

The Company entered into a Loan and Security Agreement (the "Agreement") with a
lender on February 23, 1998. Amounts available to borrow under the Agreement are
based upon the results of an advance percentage applied to eligible receivables,
as defined by the lender, and are capped at $2 million until the Company begins
selling its new P1500 projector and until the lender is satisfied such sales are
eligible for inclusion in the borrowing base. The advance percentage will
decrease if the Company exceeds a minimum formula defined in the Agreement.
Availability under the Agreement as of the date of this filing is approximately
$1.2 million, of which $650 thousand is assigned to support a stand-by letter of
credit in favor of a supplier. The maximum amount that may be advanced under the
Agreement is $5 million. Availability under the Agreement will fluctuate on a
daily basis and will decrease if accounts receivable become ineligible, as
defined in the Agreement. This availability will also decrease if sales of the
P1500 do not occur or if such sales do occur but the lender does not allow the
Company to immediately borrow against them, as defined in the Agreement. The
Agreement expires February 23, 2001. As of the date of this filing, no amounts
have been advanced under the Agreement.

Total assets decreased to $10 million at December 31, 1997 from $24.2 million at
December 31, 1996. This $14.2 million decrease consisted principally of
decreases in inventory and accounts receivable. Working capital on December 31,
1997 was $7.4 million. The Company's current ratio increased to 4.8 at December
31, 1997 from 3.4 at December 31, 1996.

Cash and cash equivalents decreased to $742 thousand on December 31, 1997 from
$1.8 million on December 31, 1996. The net decrease in cash and cash equivalents
was used to meet current liabilities and to fund capital equipment purchases in
1997.

Net receivables decreased by $4.7 million from December 31, 1996 to December 31,
1997. This decrease resulted from lower sales during the second six months of
1997. Even though net receivables decreased, the Company's total days sales
outstanding increased to 104 days at December 31, 1997 as compared to 71 days at
December 31, 1996.

Inventories decreased to $4 million at December 31, 1997 from $12 million at
December 31, 1996. This $8 million decrease included a $4.4 million write-down
of inventory to net realizable value. Throughout 1997, management reacted to
decreased sales by limiting new inventory purchases and focusing the Company on
selling older model products. These sales of older model products were typically
at higher volume, but lower average selling prices. At December 31, 1997
approximately 67% of the Company's finished goods inventory is comprised of
older model products. The Company intends to sell a majority of this inventory
by June 30, 1998, at which time the new P1500 projector

                                       17

<PAGE>



series is scheduled for shipment.

Current liabilities decreased by 71% to $2 million at December 31, 1997. This
significant decline represents reduced inventory purchases during the second six
months of 1997, as well as the timing of product purchases from Matsushita
Corporation and raw materials receipts used in the DLP product.

Shareholders' equity decreased to $8 million at December 31, 1997 from $17.3
million at December 31, 1996. This decrease is the result of the $9.3 million
net loss incurred for the year ended December 31, 1997.

The Company had no outstanding material commitments for capital expenditures at
December 31, 1997. As of December 31, 1997 the Company had noncancellable
purchase order arrangements with suppliers to purchase inventory at a total cost
of approximately $821 thousand. The inventory is scheduled to be received during
1998.

Inflation has not had a significant impact on the Company's results of
operations.

Year 2000 Compliance

The Company has performed a preliminary internal review to identify and address
the impact on its operating and application software and products related to the
year 2000. Based on the results of the initial review, the Company does not
anticipate year 2000 issues relating to the products the Company produces and
distributes. Year 2000 compliance issues relating to the Company's material
requirements planning and other application software can be resolved primarily
through replacement and normal upgrades of its software and hardware. The cost
of such replacements and upgrades is not expected to be material and the Company
anticipates completing these installations during 1999; however, there can be no
assurance that such replacements and upgrades can be completed on schedule and
within estimated costs.

Risk Factors

In addition to the risk factors noted in liquidity and capital resources, the
following discussion of risk factors describes certain aspects of the business
environment in which the Company operates. These risk factors, along with other
information in this report, should be carefully considered by users of this
report.

During 1998 the Company intends to enter new markets in which it has not
previously competed. The P1500 projector is the first product in the
Professional Series developed by the Company for sale into these new markets.
Management has devoted all product development resources of the Company on the
new series and the success of the Company is largely dependent on successful
launch and market acceptance of the series in the new markets.

The markets in which the Company operates are characterized by rapidly changing
technology, resulting in short product lives. Actual or anticipated product
releases by the Company or its competitors could cause customers to delay
purchases until the new products are available and/or to discontinue purchases
of existing products altogether. The Company's competitors may introduce
products which utilize new technologies to which the Company does not have
access. Any of these factors could have a material affect on the Company's
business and results of operations.

Revenue from the sale of products is recognized at the time of shipment to the
customer. The Company accrues for sales returns and allowances based upon
historical rates of returns. While the Company believes its estimated accrual
for sales returns and allowances is adequate, future

                                       18

<PAGE>



returns could be greater than the accruals and may materially affect future
results of operations.

The Company will continue its efforts to sell older inventory. Price reductions
of certain of the Company's older products have resulted in lower gross margins.
While the Company believes it has adequately reserved its current inventory,
rapidly changing technology and short product lives could cause this trend to
continue as the Company's current products are superseded in the market place
through the introduction of new products by the Company or its competitors.

The trading price of the Company's common stock has been and is expected to
continue to be subject to immediate and wide fluctuations due to factors both
within and outside of the Company's control. These factors include, but are not
limited to, the following: Fluctuations in operating results or financial
position, availability of financing, new product introductions by the Company or
its competitors, product reviews by trade publications, estimates or statements
made by analysts regarding the Company or the industry and markets in which the
Company operates and stock market price fluctuations.

                                       19

<PAGE>

The Nasdaq Stock Market instituted new initial and continued listing
requirements, effective February 23, 1998. The Company has been notified that it
is not in compliance with certain of the continued listing requirements for the
Nasdaq National Market and is evaluating steps to bring the Company into
compliance and is researching alternative trading mechanisms.

Item 8.           Financial Statements and Supplementary Data

         Refer to the index to Consolidated Financial Statements and Financial
Statement Schedule on page F-1 for the required information.

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

         None.



                                       20

<PAGE>



                                    PART III

Item 10.          Directors and Executive Officers of the Registrant

Directors

         Stephen C. Adams, age 47, director since 1987. Mr. Adams has been Group
Vice President of the POMOCO Group, Inc., a holding company for automobile, real
estate, insurance and development concerns, since 1986. Prior to that, he was a
partner in the public accounting firm of Hart, Adams and Toney. He is a
Certified Public Accountant and received B.S. and M.S. degrees in Accounting
from the University of Virginia.

         Edgar M. Cortright, age 74, director since 1987. Mr. Cortright retired
in 1983 as President of Lockheed California Company, and is a past Director of
the Langley Research Center of the National Aeronautics and Space Administration
("NASA"). He received B.S. and M.S. degrees in Aeronautics from Rensselaer
Polytechnic Institute ("RPI") and has received honorary Ph.D. degrees from RPI
and George Washington University.

         Angelo Guastaferro, age 65, director since 1994, Chairman since May
1995, President and Chief Executive Officer, April 1996. Mr. Guastaferro retired
in 1995 as Vice President - NASA and Federal Systems, Lockheed Missiles and
Space Company, Inc. ("Lockheed"), and is a past Deputy Director of NASA Ames
Research Center. He received a bachelor's degree from New Jersey Institute of
Technology, an MBA from Florida State University, and an AMP from Harvard
University.

         James H. Vogeley, age 39, director since 1987. Mr. Vogeley, founder of
the Company, served as Chairman of the Board from the Company's inception until
May of 1995. He was President and CEO from January 1994 until July 1995. He
holds a B.S. degree in Electrical Engineering with Distinction from Duke
University.

         Joseph G. Morone, age 44, director since 1996. Dr. Morone has been
President of Bentley College, Waltham, Massachusetts, since August 1997. Prior
to his arrival at Bentley, he served as Dean of the Lally School of Management
and Technology at RPI, from 1993 to 1997. Dr. Morone serves on the Board of
Directors of Albany International, the securities of which are traded on the New
York Stock Exchange, Transworld Entertainment, and the Board of Directors of New
England Medical Center. Dr. Morone received his bachelor's degree from Hamilton
College and his doctorate degree from Yale University.

         Grant T. Hollett, Jr., age 45, director since 1996. Mr. Hollett is Vice
President and General Manager of Vickers Electronic Systems, an electronics
manufacturing firm, a position he has held since 1996. From 1990 until 1996, Mr.
Hollett was President of Cherry Electrical Products, a major supplier of
electronic components to the automotive industry. Mr. Hollett has extensive
experience in administration and quality control management with Energy
Pollution Controls, Inc. and Proctor and Gamble Company. A graduate of the
United States Navy's nuclear power program, he currently holds the rank of Rear
Admiral in the U.S. Naval Reserve. Mr. Hollett is a graduate of Duke University
with a bachelor's degree in Mechanical Engineering.

Executive Officers

         Angelo Guastaferro, (see above), Chairman, President, and Chief
Executive Officer.

         James H. Vogeley, (see above), Chief Technology Officer.

                                       21

<PAGE>



         Jerry W. Stubblefield, age 49, Chief Financial Officer and Executive
Vice President. Mr. Stubblefield joined the Company in January 1992 and became
Chief Financial Officer in February 1992, and Executive Vice President in May
1997. He served as Chief Financial Officer of Trico USA, Inc., and Source
Telecomputing, Inc., companies wholly or partially owned by a New York based
capital investment firm, from July 1988 until September 1991. He graduated in
1980 from Christopher Newport College, with degrees in Business Management and
Accounting.

         Diane H. Lingo, age 31, Vice President - Finance and Administration.
Ms. Lingo joined the Company in 1992, serving as Accounting Manager, and
Director of Finance. Prior to 1992, she was a senior auditor for Ernst & Young
LLP in Norfolk, Virginia. She holds a Bachelor of Science in Business
Administration with Honors from Old Dominion University and is a Certified
Public Accountant.

Item 11.          Executive Compensation

         The following table presents an overview of executive compensation
awarded, earned, or paid during 1997, 1996 and 1995 to the Company's President
and Chief Executive Officer, and the Company's other executive officers that
earned in excess of $100,000 in 1997.

<TABLE>
<CAPTION>
                                            Summary Compensation Table
                                                Annual Compensation


                                                                                   Securities Underlying              All Other
Name and Principal Position          Year       Salary ($)      Bonus ($)               Options (#)                Compensation($)
---------------------------          ----       ----------      ---------               -----------                ---------------

<S> <C>

Angelo Guastaferro                   1997       171,000               --                   10,000                     2,248 (1)
President and Chief Executive        1996       176,823               --                   25,000                        --
Officer                              1995             --              --                 25,000(2)                       --
Jerry W. Stubblefield                1997       134,500               --                   17,500                     7,380 (1)
Chief Financial Officer and          1996       101,000               --                    6,000                     6,060 (1)
Executive Vice President             1995       100,846               --                   20,000                     5,594 (1)
John Malone                          1997       133,698               --                     --                      35,955 (4)
Vice President - Sales and           1996         17,308              --                   60,000                        --
Marketing (3)                        1995             --              --                     --                          --

</TABLE>

         (1) Includes the Company's matching contribution to its 401(k)
         retirement savings plan.
         (2) Mr. Guastaferro became an employee of the Company in 1996, serving
         as a director since 1994 and Chairman since 1995.
         (3) Mr. Malone was employed by the Company from November 1996 until
         December 1997.
         (4) Relocation reimbursement.

Compensation Committee Interlocks and Insider Participation

The Company's Compensation Committee was comprised of the following directors
during 1997: Stephen C. Adams, Edgar M. Cortright and Joseph G. Morone. During
1997, no executive officer of the Company served as a member of the Compensation
Committee of another entity, nor did any executive officer of the Company serve
as a director of another entity.




                                       22

<PAGE>

<TABLE>
<CAPTION>

                                         Option Grants in Last Fiscal Year


                                                                                                                Potential Realizable
                                                                                                                  Value at Assumed
                                                                                                                   Annual Rates of
                                                  % of Total          Exercise                                       Stock Price
                               Options         Options Granted        or base                                     Appreciation for
                               Granted         to Employees in         price                                         Option Term
           Name                  (#)             Fiscal Year          ($/sh.)        Expiration Dates               5%           10%
           ----                  ---             -----------          -------        ----------------              -------     -----

<S> <C>

Angelo Guastaferro                   10,000                  6.06%          $2.10                9/10/03           $4,971    $13,333

Jerry Stubblefield                    5,000                   3.03           4.10      1/16/03 - 1/16/04           $5,886    $14,382
                                      7,500                   4.55           2.10                9/10/03            3,728     10,000
                                      5,000                   3.03           1.07        7/1/03 - 1/1/04            3,254      5,789

</TABLE>

Retirement Savings Plan

The Company has a defined contribution plan ("nVIEW Retirement Savings Plan")
under Section 401(k) of the Internal Revenue Code in which employees of the
Company are eligible to participate. The plan permits employees to elect to
invest not more than 15% of their qualified compensation (subject to a maximum
imposed on highly-compensated employees each year by the Internal Revenue Code)
on a tax-deferred basis in a fixed income fund, a balanced fund, an intermediate
bond fund, a small company fund or an equity fund. Participants in the plan have
matching Company contributions made to the plan on their behalf equal to 100% of
their contributions not to exceed 6% of their base salary. The preceding Summary
Compensation Table shows the value of Company contributions made to the plan
with respect to the named executive officers in the column marked "All Other
Compensation."

In years when operational results warrant, the Company may make a discretionary
profit sharing contribution, in addition to the 401(k) match. Participants must
have worked a minimum of 1,000 hours and be employed on the last day of the year
to receive profit sharing contributions. Contributions are also made to the
accounts of participants who have retired, deceased, or become disabled during
the plan year. Both the 401(k) match and the profit sharing contributions vest
according to the following schedule:

                                       23

<PAGE>

<TABLE>
<CAPTION>

                           Years of Service                Vesting %
                           ----------------                ---------

<S> <C>

                                    0-1                          0
                                    1                           10
                                    2                           40
                                    3                           70
                                    4                          100

</TABLE>

                                       24

<PAGE>



Item 12.          Security Ownership of Certain Beneficial Owners and Management

         The following table sets forth, as of February 27, 1998, beneficial
ownership of shares of Common Stock of the Company of (i) each of the Company's
directors and named executive officers who own Common Stock; and (ii) all
directors and executive officers as a group. Except as set forth below, the
Company is not aware of any person (or group of affiliated persons) who owns
beneficially more than 5% of the Common Stock. All directors and executive
officers of the Company receive mail at the Company.

<TABLE>
<CAPTION>

                                                                Total Number                              Percent of
                                                                   Shares                                   Common
              Name of Individual or                             Beneficially                                 Stock
           Number of Persons in Group                              Owned                                     Owned
-------------------------------------------------          ----------------------                      -----------------

<S> <C>

Stephen C. Adams (1)(2)                                                    21,994                              *
Edgar M. Cortright (3)(2)                                                  52,356                            1.04
Angelo Guastaferro (4)                                                     53,522                            1.06
Grant T. Hollett, Jr. (2)                                                   8,000                              *
Diane H. Lingo (5)                                                          9,145                              *
Joseph G. Morone (2)                                                        8,000                              *
Jerry W. Stubblefield (6)                                                  43,700                              *
James H. Vogeley (7)                                                      772,000                            15.42
Directors and executive officers as a
group (8 persons)                                                         968,717                            18.94

</TABLE>

         *Less than 1% ownership.
         (1) Includes 2,118 shares owned by Mr. Adams' wife, Nancy B. Adams. Mr.
Adams disclaims beneficial ownership of these shares. Mr. Adams is a director of
the Company.
         (2) Includes currently exercisable options to purchase 8,000 shares
granted under the Director Plan.
         (3) Includes 27,356 shares owned by a revocable trust for the benefit
of Mr. Cortright. Also includes 17,000 shares owned by a revocable trust for the
benefit of Mr. Cortright's wife, for which Mr. Cortright disclaims beneficial
ownership. Mr. Cortright is a director of the Company.
         (4) Includes 26,000 shares that may be purchased pursuant to incentive
stock options granted by the Company.
         (5) Includes 9,125 shares that may be purchased pursuant to incentive
stock options granted by the Company.
         (6) Includes 43,500 shares that may be purchased pursuant to incentive
stock options granted by the Company.
         (7) Does not include 94,850 shares owned by the Estate of Arthur W.
Vogeley, Mr. Vogeley's deceased father and 168,448 shares owned by Mr. Vogeley's
mother, Julia B. Vogeley. All of these individuals disclaim beneficial ownership
of shares owned by each other.




                                       25

<PAGE>



Item 13.          Certain Relationships and Related Transactions

         None.

                                    PART IV

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

         (a)      The following documents are filed as part of this Report:

                  1.       Consolidated Financial Statements.
                           See index to Consolidated Financial Statements and
                           Financial Statement Schedule on page F-1 of this
                           Report.

                  2.       Consolidated Financial Statement Schedule.
                           See index to Consolidated Financial Statements and
                           Financial Statement Schedule on page F-1 of this
                           Report.


                                       26

<PAGE>

<TABLE>
<CAPTION>


3.                                   EXHIBIT INDEX




   Exhibit
     No.                            Description

<S> <C>

          3.1 Articles of Incorporation of nVIEW Corporation, as amended.                                 *
              (Incorporated by reference to the Registrant's Registration
              Statement on Form S-18, Commission File No. 33-39471,
              previously filed with the Commission on March 15, 1991.)

          3.2 Bylaws of nVIEW Corporation. (Incorporated by reference to the                              *
              Registrant's Registration Statement on Form S-18, Commission
              File No. 33-39471, previously filed with the Commission on
              March 15, 1991.)

        3.2.1 Amendment to Bylaws of nVIEW Corporation. (Incorporated by *
              reference to the Registrant's Form 10-K for the fiscal year ended
              December 31, 1995, Commission File No. 0-19492, previously filed
              with the Commission.)

           4. Form of the nVIEW Corporation Common Stock Certificate.                                     *
              (Incorporated by reference to Amendment No. 3 to the
              Registrant's Registration Statement on Form S-18, Commission
              File No. 33-39471, previously filed with the Commission on April
              17, 1991.)

         10.1 Incentive Stock Option Plan of nVIEW Corporation, dated April                               *
              15, 1991.  (Incorporated by reference to Amendment No. 3 to
              the Registrant's Registration Statement on Form S-18,
              Commission File No. 33-39471, previously filed with the
              Commission on April 17, 1991.)

         10.2 Amended and Restated Incentive Stock Option Plan of nVIEW                                   *
              Corporation, dated April 15, 1991. (Incorporated by reference to
              the Registrant's Registration Statement on Form S-1, Commission
              File No. 33-44442, previously filed with the Commission on
              December 17, 1991.)

         10.3 Form of Confidentiality Agreement in effect for 1995 executed by                            *
              employees of nVIEW Corporation. (Incorporated by reference to the
              Registrant's Form 10-K for the fiscal year ended December 31,
              1995, Commission File No. 0-19492, previously filed with the
              Commission.)

         10.4 Lease Agreement, as amended, between Alfred J. Cenname, as                                  *
              lessor and nVIEW Corporation, as lessee. (Incorporated by
              reference to the Registrant's Registration Statement on Form S-18,
              Commission File No. 33-39471, previously filed with the Commission
              on April 17, 1991.)


                                       27

<PAGE>




   Exhibit
     No.                                       Description
         10.5 nVIEW Corporation 1992 Stock Option Plan. (Incorporated by                                  *
              reference to the Registrant's Form 10-K for the fiscal year ended
              December 31, 1992, Commission File No. 0-19492, previously filed
              with the Commission.)

         10.6 1994 Long-Term Incentive Plan. (Incorporated by reference to the                            *
              Registrant's Form 10-Q for the quarter ended June 30, 1994,
              Commission File No. 0-19492, previously filed with the
              Commission.)

         10.7 Loan and Security Agreement, dated February 6,1996, by and                                  *
              between nVIEW Corporation and Signet Bank. (Incorporated by
              reference to the Registrant's Form 10-K for the fiscal year ended
              December 31, 1995, Commission File No. 0-19492, previously filed
              with the Commission.)

         10.8 Nonqualified Option Agreement, nVIEW Corporation 1994                                       *
              Incentive Stock Plan - Angelo Guastaferro. (Incorporated by
              reference to the Registrant's Form 10-K for the fiscal year
              ended December 31, 1995, Commission File No. 0-19492,
              previously filed with the Commission.)

         10.9 Form of nVIEW Corporation Incentive Stock Option Agreement -                                *
              Robert Hoke (Incorporated by reference to the Registrant's Form
              10-K for the fiscal year ended December 31, 1995, Commission File
              No. 0-19492, previously filed with the Commission.)

        10.10 Form of nVIEW Corporation Incentive Stock Option Agreement -                                *
              Robert Hoke (Incorporated by reference to the Registrant's Form
              10-K for the fiscal year ended December 31, 1995, Commission File
              No. 0-19492, previously filed with the Commission.)

        10.11 nVIEW Corporation Incentive Stock Option Agreement - Wayne                                  *
              Bailey, dated May 10, 1995. (Incorporated by reference to the
              Registrant's Form 10-K for the fiscal year ended December 31,
              1995, Commission File No. 0-19492, previously filed with the
              Commission.)

        10.12 nVIEW Corporation Incentive Stock Option Agreement - Jerry                                  *
              Stubblefield, dated May 10, 1995. (Incorporated by reference to
              the Registrant's Form 10-K for the fiscal year ended December 31,
              1995, Commission File No. 0-19492, previously filed with the
              Commission.)

        10.13 nVIEW Corporation 1996 Employee Stock Option Plan (Incorporated                             *
              by reference to the Registrant's Form 10-Q for the quarter ended
              June 30, 1996, Commission File No. 0- 19492, previously filed with
              the Commission.)


                                       28

<PAGE>




   Exhibit
     No.                                       Description
        10.14 nVIEW Corporation 1996 Non-Employee Director Stock Option Plan.                             *
              (Incorporated by reference to the Registrant's Form 10-Q for the
              quarter ended June 30, 1996, Commission File No. 0- 19492,
              previously filed with the Commission.)

        10.15 nVIEW Corporation Incentive Stock Option Agreement - Angelo                                 *
              Guastaferro, dated May 10, 1996
        10.16 nVIEW Corporation Incentive Stock Option Agreement - Jerry                                  *
              W. Stubblefield, dated May 10, 1996
        10.17 nVIEW Corporation Incentive Stock Option Agreement - John                                   *
              F. Malone, dated November 4, 1996
        10.18 Form of nVIEW Corporation Non-employee Director Stock                                       *
              Option Agreement
        10.19 Agreement, dated January 21, 1998, between nVIEW Corporation                               **
              and Snell & Wilcox Limited.
        10.20 Loan and Security Agreement, dated February 23,1998, by and                                **
              between nVIEW Corporation and The C.I.T. Group.
          21. Subsidiaries of nVIEW Corporation.                                                         **
          23. Consent of Independent Auditors.                                                           **
          24. Power of Attorney (appears on Page 26 herein).                                             **

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

*        Not filed herewith. In accordance with Rule 12(b)-32 of the General
         Rules and Regulations under the Securities Exchange Act of 1934, the
         exhibit is incorporated by reference.

**       Filed herewith.

         (b)      The registrant did not file any reports on Form 8-K during the
                  fourth quarter of the fiscal year ended December 31, 1997.



                                       29

<PAGE>





Signatures

         Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.


                               nVIEW Corporation




                           By: /s/ Angelo Guastaferro
                               ----------------------
                               Angelo Guastaferro
                     President and Chief Executive Officer
                                 Date: 4/13/98





                         By: /s/ Jerry W. Stubblefield
                             -------------------------
                             Jerry W. Stubblefield
                            Chief Financial Officer
                                 Date: 4/13/98

                                       30

<PAGE>



Power of Attorney

         KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Angelo Guastaferro and Jerry W.
Stubblefield, and each of them individually, as his true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for his and in his name, place and stead, in any and all capacities, to sign any
and all amendments to this report, and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorney-in-fact and agent full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in connection therewith, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorney-in-fact and agent of his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.

         Pursuant to the requirements of the Securities Exchange Act of 1934,
this Report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.


</TABLE>
<TABLE>
<CAPTION>

<S> <C>

/s/ Angelo Guastaferro                      Director, Chairman                          4/13/98
----------------------                      President and
Angelo Guastaferro                          Chief Executive Officer



/s/ Jerry W. Stubblefield                   Chief Financial Officer                     4/13/98
-------------------------                   (& Principal Accounting Officer)
Jerry W. Stubblefield


/s/ Stephen C. Adams                        Director                                    4/13/98
--------------------
Stephen C. Adams


/s/ Edgar M. Cortright                      Director                                    4/13/98
----------------------
Edgar M. Cortright


/s/ James H. Vogeley                        Director                                    4/13/98
--------------------
James H. Vogeley


/s/ Joseph Morone                           Director                                    4/13/98
-----------------
Joseph Morone


/s/ Grant T. Hollett, Jr.                   Director                                    4/13/98
-------------------------
Grant T. Hollett, Jr.

                                       31

<PAGE>

                  Index to nVIEW Corporation and Subsidiaries
                     Consolidated Financial Statements and
                          Financial Statement Schedule



Consolidated Financial Statements:

   Independent Auditors' Report                                             F-2

   Consolidated Balance Sheets as of December 31, 1997 and 1996             F-3

   Consolidated Statements of Operations for the years ended                F-4
       December 31, 1997, 1996 and 1995

   Consolidated Statements of Shareholders' Equity for the years ended      F-5
       December 31, 1997, 1996 and 1995

   Consolidated Statements of Cash Flows for the years ended                F-6
       December 31, 1997, 1996 and 1995

   Notes to Consolidated Financial Statements                               F-8

Consolidated Financial Statement Schedule -

   Schedule II - Valuation and Qualifying Accounts                         F-18

                                      F-1

<PAGE>

                          INDEPENDENT AUDITORS' REPORT


The Board of Directors and Shareholders
nVIEW Corporation:

We have audited the consolidated  financial  statements of nVIEW Corporation and
subsidiaries as listed in the accompanying  index. In connection with our audits
of the  consolidated  financial  statements,  we also have audited the financial
statement  schedule  as listed in the  accompanying  index.  These  consolidated
financial  statements and financial statement schedule are the responsibility of
the Company's  management.  Our responsibility is to express an opinion on these
consolidated  financial statements and financial statement 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 audits 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 financial  position of nVIEW Corporation
and  subsidiaries  as of December  31,  1997 and 1996,  and the results of their
operations and their cash flows for each of the years in the  three-year  period
ended  December 31, 1997,  in  conformity  with  generally  accepted  accounting
principles.  Also in our opinion, the related financial statement schedule, when
considered in relation to the basic consolidated financial statements taken as a
whole,  presents  fairly,  in all material  respects,  the information set forth
therein.



                                                   /s/ KPMG Peat Marwick LLP

Norfolk, Virginia
February 17, 1998, except
    as to note 7, which is
    as of March 8, 1998


                                      F-2

<PAGE>


                       nVIEW Corporation and Subsidiaries
                          Consolidated Balance Sheets
                           December 31, 1997 and 1996

                                                    1997          1996
                                                =============   ===========
Assets (note 7)

Current assets:
   Cash and cash equivalents                         $742,063    $1,802,596
   Receivables, net (note 3)                        4,317,967     9,057,646
   Inventories (note 4)                             3,975,958    11,997,760
   Prepaid expenses                                   346,180       331,306
                                                =============   ===========

         Total current assets                       9,382,168    23,189,308
                                                -------------   -----------

Property and equipment, net (note 5)                  459,724       801,641
Other assets, net                                     123,819       191,388
                                                =============   ===========

                                                   $9,965,711   $24,182,337
                                                =============   ===========

Liabilities and Shareholders' Equity

Current liabilities:
   Accounts payable                                $1,020,760    $5,890,860
   Accrued warranties                                 197,611       197,611
   Accrued sales returns and allowances               170,429       203,013
   Accrued co-op                                      120,419       105,009
   Accrued payroll                                    206,768       244,358
   Accrued legal fees                                 154,586        33,227
   Other accrued expenses                             102,158       206,387
                                                =============   ===========

         Total current liabilities                  1,972,731     6,880,465
                                                =============   ===========

Shareholders' equity: (note 8)
   Common stock, no par value.
   Authorized 20,000,000 shares;
   5,005,166 issued and outstanding at
   December 31, 1997 and 1996.                             --            --
  Additional paid-in capital                       25,060,978    25,060,978
  Accumulated deficit                            (17,067,998)   (7,759,106)
                                                =============   ===========

         Total shareholders' equity                 7,992,980    17,301,872
Commitments, contingencies and subsequent events
   (notes 2, 4, 6, 7 and 11)
                                                =============   ===========
                                                   $9,965,711   $24,182,337
                                                =============   ===========

See accompanying notes to consolidated financial statements.

                                      F-3

<PAGE>

                       nVIEW Corporation and Subsidiaries
                     Consolidated Statements of Operations
                  Years ended December 31, 1997, 1996 and 1995


</TABLE>
<TABLE>
<CAPTION>
                                                 1997                 1996                   1995
                                           =================    =================     ==================
<S>   <C>
Sales                                            $19,883,705          $34,524,562            $32,875,800
Cost of goods sold                                21,575,304           27,468,563             26,793,828
                                           =================    =================     ==================

          Gross profit                           (1,691,599)            7,055,999              6,081,972
                                           =================    =================     ==================

Operating expenses:
   Marketing and promotion                         3,252,713            3,687,925              6,841,191
   Research and development                        1,917,947            1,993,508              4,704,348
   General and administrative                      2,279,478            2,072,386              2,368,790
                                           =================    =================     ==================

          Total operating expenses                 7,450,138            7,753,819             13,914,329
                                           =================    =================     ==================

          Loss from operations                   (9,141,737)            (697,820)            (7,832,357)
                                           =================    =================     ==================

Other income (expense):
   Interest expense                                (190,997)            (190,954)              (113,480)
   Interest income                                    57,049              103,934                132,627
   Other income (expense), net                      (33,207)             (20,443)                  1,200
                                           =================    =================     ==================
                                                   (167,155)            (107,463)                 20,347
                                           =================    =================     ==================

          Loss before income taxes               (9,308,892)            (805,283)            (7,812,010)

Income tax benefit (note 9)                               --                   --               (34,765)
                                           =================    =================     ==================

          Net loss                              ($9,308,892)           ($805,283)           ($7,777,245)
                                           =================    =================     ==================

Net loss per share - basic and diluted               ($1.86)              ($0.16)                ($1.59)
                                           =================    =================     ==================

Weighted average
common shares outstanding                          5,005,166            4,941,643              4,898,830
                                           =================    =================     ==================
</TABLE>

See accompanying notes to consolidated financial statements.

                                      F-4

<PAGE>

                       nVIEW Corporation and Subsidiaries
                Consolidated Statements of Shareholders' Equity
                  Years ended December 31, 1997, 1996 and 1995
<TABLE>
<CAPTION>
                                                 Common Stock                                    Retained
                                      =================================
                                                                             Additional          Earnings             Total
                                          Number of                           Paid-In          (Accumulated       Shareholders'
                                            Shares            Amount          Capital            Deficit)            Equity
                                      ==================    ===========    ==============    ================    ===============
<S>   <C>
Balance at December 31, 1994                   4,892,361             --       $24,435,843      $      823,422        $25,259,265

Issuance of restricted stock                         480             --             3,486                  --              3,486

Stock options exercised (note 8)                  11,400             --            56,738                  --             56,738

Net loss                                              --             --                --         (7,777,245)        (7,777,245)
                                      ==================    ===========    ==============    ================    ===============

Balance at December 31, 1995                   4,904,241             --        24,496,067         (6,953,823)         17,542,244

Stock options exercised (note 8)                 100,925             --           564,911                  --            564,911

Net loss                                              --             --                --           (805,283)          (805,283)
                                      ==================    ===========    ==============    ================    ===============

Balance at December 31, 1996                   5,005,166             --        25,060,978         (7,759,106)         17,301,872

Net loss                                              --             --                --         (9,308,892)        (9,308,892)
                                      ==================    ===========    ==============    ================    ===============

Balance at December 31, 1997                   5,005,166             --       $25,060,978       ($17,067,998)       $  7,992,980
                                      ==================    ===========    ==============    ================    ===============
</TABLE>

See accompanying notes to consolidated financial statements.


                                      F-5

<PAGE>

                       nVIEW Corporation and Subsidiaries
                     Consolidated Statements of Cash Flows
                  Years ended December 31, 1997, 1996 and 1995

<TABLE>
<CAPTION>
                                                                         1997                  1996                1995
                                                                   ================      ================     ===============
<S>   <C>
Cash flows from operating activities:
   Net loss                                                            ($9,308,892)            ($805,283)        ($7,777,245)
                                                                   ================      ================     ===============
   Adjustments to reconcile net loss to net cash
      provided by (used in) operating activities:
        Depreciation and amortization                                       618,347               807,013             690,189
        Loss on disposal of assets                                           34,356                19,326                  --
        Deferred tax expense                                                     --                    --             534,000
        Other adjustments                                                        --                    --               4,686

        Change in assets and liabilities increasing
          (decreasing) cash flows from operating activities:
            Receivables, net                                              4,739,679           (1,226,251)           (776,968)
            Inventories                                                   8,021,802           (1,995,170)           5,903,675
            Prepaid expenses                                               (14,874)                12,190              74,285
            Income taxes receivable                                              --               587,000           (396,000)
            Accounts payable                                            (4,870,100)             3,003,963         (2,969,473)
            Accrued warranties                                                   --              (37,389)                  --
            Accrued sales returns and allowances                           (32,584)              (84,487)              37,500
            Accrued co-op                                                    15,410               (9,088)            (33,008)
            Accrued payroll                                                (37,590)             (115,394)           (166,271)
            Accrued legal fees                                              121,359                 3,332            (32,227)
            Other accrued expenses                                        (104,229)                75,040              36,839
            Other                                                             6,362                 1,957               2,381
                                                                   ----------------      ----------------     ---------------

              Total adjustments                                           8,497,938             1,042,042           2,909,608
                                                                   ================      ================     ===============

              Net cash provided by (used in) operating activities         (810,954)               236,759         (4,867,637)
                                                                   ================      ================     ===============

                                                                                                                  (continued)

                                      F-6

<PAGE>






                       nVIEW Corporation and Subsidiaries
             Consolidated  Statements  of  Cash  Flows (continued)
                 Years ended  December  31, 1997, 1996 and 1995


</TABLE>
<TABLE>
<CAPTION>
                                                                    1997                     1996                   1995
                                                              =================       ==================     ==================
<S>   <C>
Cash flows from investing activities:
     Purchase of marketable securities                                       --                       --              (195,715)
     Sale of marketable securities                                           --                       --              2,390,593
     Additions to property and equipment                              (243,765)                (393,154)              (499,839)
     Payment of deferred patent costs                                   (5,814)                 (10,736)               (50,924)
                                                             ------------------       ------------------     ------------------
               Net cash provided by (used in)
                 investing activities                                 (249,579)                (403,890)              1,644,115
                                                              -----------------       ------------------     ------------------

Cash flows from financing activities:
   Proceeds from revolving line of credit                                    --                       --             $9,068,000
   Repayments of revolving line of credit                                    --                       --            (9,068,000)
   Stock options exercised                                                   --                  564,911                 56,738
                                                              -----------------       ------------------     ------------------
        Net cash provided by financing activities                            --                  564,911                 56,738
                                                              =================       ==================     ==================

Net increase (decrease) in cash and cash equivalents               ($1,060,533)                 $397,780           ($3,166,784)

Cash and cash equivalents at beginning of year                        1,802,596                1,404,816              4,571,600
                                                              =================       ==================     ==================

Cash and cash equivalents at end of year                               $742,063               $1,802,596             $1,404,816
                                                              =================       ==================     ==================

Supplemental disclosure of cash flow information:
   Cash paid during the year for interest                              $207,336                 $145,396               $113,855
                                                              =================       ==================     ==================

   Cash paid during the year for income taxes                           $27,056                  $40,326                 $9,251
                                                              =================       ==================     ==================
</TABLE>

See accompanying notes to consolidated financial statements.

                                      F-7

<PAGE>

                       nVIEW CORPORATION AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements

                        December 31, 1997, 1996 and 1995


(1)       Summary of Significant Accounting Policies

         (a)   Business Activity

         The Company designs,  manufactures and markets products to project high
quality  images  from a variety of computer  and video  sources.  The  Company's
products  facilitate  large screen  viewing of multimedia  information  in group
settings for business, educational, entertainment and other purposes.

         (b)   Principles of Consolidation

         The consolidated  financial statements include the financial statements
of nVIEW  Corporation and its  wholly-owned  subsidiaries  after  elimination of
intercompany accounts and transactions.

         (c)   Cash Equivalents

         Cash  equivalents  consist of  certificates  of deposit and amounted to
$50,600 and $521,404 at December  31, 1997 and December 31, 1996,  respectively.
The  Company   considers  all  highly  liquid  debt  instruments  with  original
maturities of three months or less to be cash equivalents.

         (d)   Inventories

         Inventories are stated at the lower of cost or market. Cost is computed
on a currently  adjusted  standard  basis (which  approximates  actual cost on a
first-in,  first-out basis). Cost of work in process and finished goods includes
raw materials, direct labor and manufacturing overhead.

         (e)   Property and Equipment

         Property and  equipment  are stated at cost and  depreciated  using the
straight-line  method over the estimated  useful lives of the assets.  Leasehold
improvements  are amortized over the lesser of the estimated  useful life of the
asset or the lease  term.  Estimated  useful  lives  range  between one and five
years.

         (f)   Other Assets

         Other assets  consist  principally  of patents which are stated at cost
and amortized using the straight-line  method over the estimated useful lives of
the respective patents.  The total accumulated  amortization at December 31,1997
and 1996 was $176,901 and $125,453, respectively.

         (g)   Revenue Recognition

         Revenue from product sales is  recognized  upon  shipment.  The Company
provides  an  allowance  for  estimated  future  returns,  exchanges  and  price
protection.

         (h)   Warranties
                                      F-8

<PAGE>

                       nVIEW CORPORATION AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements

         The Company's  warranty  policy  provides  one-year  coverage on parts,
excluding  bulbs,  and labor  from the date of sale to the  end-user.  Estimated
warranty costs are accrued at the time of sale and are periodically  adjusted to
reflect actual experience.

         (i)   Research and Development

         Research and development costs are expensed as incurred.

         (j)   Income Taxes

         Income taxes are accounted  for under the asset and  liability  method.
Deferred  tax  assets  and   liabilities  are  recognized  for  the  future  tax
consequences   attributable  to  differences  between  the  financial  statement
carrying  amounts of existing assets and  liabilities  and their  respective tax
bases and operating loss tax carryforwards.  Deferred tax assets and liabilities
are measured  using enacted tax rates expected to apply to taxable income in the
years in which those  temporary  differences  are  expected to be  recovered  or
settled.  The effect on deferred taxes of a change in tax rates is recognized in
income in the period that includes the enactment date.

         (k)   Net Income (Loss) Per Share

         Beginning December 31, 1997, basic earnings per share (EPS) and diluted
EPS are  computed  using  the  methods  prescribed  by  Statement  of  Financial
Accounting  Standard  No.  128,  EARNINGS  PER SHARE  (SFAS  128).  Basic EPS is
calculated  using the weighted  average number of common shares  outstanding for
the period and diluted  EPS is computed  using the  weighted  average  number of
common shares and dilutive common shares outstanding.  Prior period amounts have
been restated to conform with the presentation requirements of SFAS 128.

         (l)   Use of Estimates

         Management   of  the  Company  has  made  a  number  of  estimates  and
assumptions  relating  to the  reporting  of  assets  and  liabilities  and  the
disclosure of contingent  assets and liabilities at the date of the consolidated
financial  statements and the reported  amounts of revenues and expenses  during
the reported  periods to prepare  these  consolidated  financial  statements  in
conformity with generally accepted accounting  principles.  Actual results could
differ from those  estimates.  Management  believes that the estimates  used are
reasonable.

         (m)    Impairment of Long-Lived Assets and Long-Lived Assets to Be
                Disposed Of

         The Company  reviews  its  long-lived  assets and certain  identifiable
intangibles for impairment whenever events or changes in circumstances  indicate
that the carrying amount of an asset may not be recoverable.  Recoverability  of
assets to be held and used is measured by a comparison of the carrying amount of
an asset to future  undiscounted  cash flows  expected  to be  generated  by the
asset.  If such assets are  considered  to be  impaired,  the  impairment  to be
recognized is measured by the amount by which the carrying  amount of the assets
exceed the fair value of the assets.  Assets to be  disposed of are  reported at
the lower of the carrying amount or fair value less costs to sell.

                                      F-11

<PAGE>

                       nVIEW CORPORATION AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements

         (n)   Stock-Based Compensation

         The Company accounts for stock-based employee compensation arrangements
in accordance with the provisions of Accounting Principles Board Opinion ("APB")
No. 25,  "Accounting  for Stock  Issued to  Employees,"  and  complies  with the
disclosure  provisions of SFAS 123,  "Accounting for Stock-Based  Compensation."
Under APB 25,  compensation  cost is recognized over the vesting period based on
the  difference,  if any,  on the date of grant  between  the fair  value of the
Company's stock and the amount an employee must pay to acquire the stock.

         (o)   Reclassification

         Certain   reclassifications  have  been  made  to  the  1995  and  1996
consolidated  financial  statements to conform to the 1997  financial  statement
presentation.

(2)      Certain Risks and Uncertainties

         The  Company's  sales are generated  from a relatively  small number of
products.   In  addition,   the  markets  in  which  the  Company  competes  are
characterized  by  rapidly  changing  technology,   requiring  constant  product
innovation.  Most of the Company's  existing  products are at or near the end of
their respective product life cycles. The Company is currently in the process of
developing a new product line, which is expected to be available for sale in the
second quarter of 1998.  Although management believes that this new product line
will gain  acceptance in the  marketplace and will provide the Company access to
new  markets,  there  can be no  assurance  that the new  product  line  will be
completed  on a timely  basis  or that  the  products  will be  accepted  in the
marketplace.  Lack of acceptance of the new product line, especially in light of
the age of the Company's existing products, could have a material adverse effect
on the Company's results of operations and financial position.

         Certain  components used in the manufacturing of the Company's products
are available  from a single  source.  An extended lack of  availability  of the
components  supplied by this single source would adversely  affect the Company's
results of operations. Additionally, all of the components used in the Company's
products are purchased from outside  sources,  some of which are located outside
the United States.  There is no assurance that trading  policies  adopted by the
United States or foreign  governments will not restrict the availability of such
components or increase their costs.

         (3)      Receivables

         Receivables at December 31, 1997 and 1996 consist of the following:

                                      F-12

<PAGE>

<TABLE>
<CAPTION>

                                                                    1997                 1996
                                                                    ----                 ----
<S> <C>

Trade accounts receivable, net of allowance
for doubtful accounts of $416,000, and
$240,000 for 1997 and 1996, respectively                              $4,201,154           $8,521,398
Due from customer finance companies                                           --               28,549
Due from suppliers                                                        19,995              481,262
Other                                                                     96,818               26,437
                                                                   -------------        -------------
   Receivables, net                                                   $4,317,967           $9,057,646
                                                                      ==========           ==========

</TABLE>

(4)      Inventories

         Inventories at December 31, 1997 and 1996 consist of the following:

<TABLE>
<CAPTION>
                                                            1997                1996
                                                            ----                ----
<S> <C>

Raw material                                                 $1,158,830         $6,734,966
Work in process                                                 201,919            211,399
Finished goods                                                2,615,209          5,051,395
                                                              ---------       ------------
     Inventories                                             $3,975,958        $11,997,760
                                                             ==========        ===========

</TABLE>







                                                            F-13

<PAGE>


                                      nVIEW CORPORATION AND SUBSIDIARIES
                                  Notes to Consolidated Financial Statements


         During 1997, the Company wrote down its inventories to estimated net
realizable value by $4.4 million. As of December 31, 1997, the Company had
non-cancelable  open purchase order  arrangements  with  suppliers  to purchase
inventory  at a total cost of approximately  $821,000. The inventory items are
scheduled to be received during 1998.

(5)      Property and Equipment

         Property and  equipment  at December 31, 1997 and 1996  consists of the
following:

<TABLE>
<CAPTION>
                                                              1997              1996
                                                              ----              ----

<S> <C>

Furniture and fixtures                                          $358,013          $406,517
Equipment                                                      2,585,975         2,506,363
Leasehold improvements                                           349,956           310,813
                                                             -----------       -----------
                                                               3,293,944         3,223,693
Less accumulated depreciation and
amortization                                                   2,834,220         2,422,052
                                                              ----------        ----------
    Property and equipment, net                                 $459,724          $801,641
                                                              ==========        ==========

</TABLE>

(6)      Lease Commitments

         The Company has various operating lease  arrangements for equipment and
office  space.  Included  in  the  consolidated   statements  of  operations  is
approximately  $515,000,  $588,000,  and  $567,000 of net rent expense for 1997,
1996 and 1995, respectively. At December 31, 1997, future minimum lease payments
under non-cancelable operating leases are as follows:


1998                              $ 439,000
1999                                405,000
2000                                413,000
2001                                429,000
2002                                446,000
                              -------------
                                $ 2,132,000

         Certain  office space for which the Company was committed was sublet to
others under  subleases  until December 31, 1997,  using the same terms as those
offered to the Company. Included in the consolidated statements of operations is
approximately  $ 262,000,  $254,000,  and $247,000 of sublease  income for 1997,
1996, and 1995, respectively.

(7)      Line of Credit and Letter of Credit

         At December 31, 1997, the Company had a line of credit  agreement which
expired on February 6, 1998. The line of credit agreement provided for borrowing
of up to $7  million  at the  prime  rate  plus  1  1/2%.  Accounts  receivable,
equipment,  intangibles,  inventory and other assets were pledged as collateral.
Throughout  1997,  the  Company was not in  compliance  with  certain  financial
covenants contained in the borrowing agreement. The lender declined to waive the
non-compliance  but agreed to forbear from enforcing its rights and remedy until
February  6,  1998,  the  expiration  date of the line of  credit.  Terms of the
forbearance  agreement  included  reducing the line of credit from $7 million to
$2.5 million, with all advances at the discretion of the lender. At December 31,
1997 there were no borrowings outstanding under the line of credit.







                                      F-14

<PAGE>


                       nVIEW CORPORATION AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements


         Subsequent  to year end,  the Company  entered into a loan and security
Agreement (the  "Agreement")  with an asset based lender.  The Agreement,  which
expires on  February  23,  2001,  allows for  maximum  borrowing  of $5 million,
subject to certain  borrowing base  limitations,  at the prime rate plus 1 1/2%.
Accounts  receivable,  equipment,  inventory,  intangibles  and other assets are
pledged  as  collateral.  The  terms  of  the  Agreement  contain  no  financial
covenants.  At March 8, 1998 the Company had unused  borrowing  capacity of $1.2
million of which $650  thousand  was  assigned  to support a stand-by  letter of
credit in favor of a supplier. At March 8, 1998 the Company had not borrowed
against the line of credit.

(8)      Stock Option Plans

         In March 1991,  the Company  adopted the nVIEW Stock  Option Plan (1991
Plan)  which  provides  for the grant of  incentive  stock  options to  selected
employees and officers to purchase up to 300,000  shares.  In 1992,  the Company
adopted the 1992 Stock Option Plan (1992 Plan).  The 1992 Plan  provides for the
grant of stock options to  prospective  directors as an inducement to serve as a
director  of the  Company,  selected  employees,  consultants  and  officers  to
purchase up to 80,000  shares.  In May 1994,  the Company  adopted the 1994 Long
Term Incentive  Plan (1994 Plan).  The 1994 Plan provides for the grant of stock
options to selected officers and employees of the Company. This plan defines the
number of shares for which options may be granted under the 1994,  1992 and 1991
Plans in the  aggregate,  as not greater than 10% of the issued and  outstanding
common stock of the Company at any time.  Grants  under the 1991,  1992 and 1994
Plans  typically  vest over a four year  period  and  expire  five  years  after
vesting.

         The 1996 Employee Stock Option Plan provides for the grant of incentive
stock options to selected  employees to purchase up to 120,000  shares.  Options
granted under this plan use a variety of vesting schedules and expire five years
after vesting.  The 1996  Non-employee  Directors Stock Option Plan provides for
the grant of non-qualified  stock options to non-employee  directors to purchase
up to 100,000  shares.  Grants under the  Non-employee  Directors  Plan vest and
become fully exercisable on the date of grant and expire in five years.

         At December  31,  1997,  the Plans  authorize  grants to purchase up to
720,517 shares of authorized but unissued  common stock, of which 186,184 shares
remain available for grant.

         The per share  weighted-average  fair  value of stock  options  granted
during  1997,  1996 and 1995  were  $1.08,  $1.95 and $3.01 on the date of grant
using  the  Black  Scholes  multiple  option-pricing  model  with the  following
weighted average  assumptions:  expected dividend yield 0.0%,  volatility factor
range of 70% to 86%,  risk-free  interest rate of 5.5% to 6.3%,  and an expected
life of 1.18 to 5.18 years.

         The Company applies APB Opinion No. 25 in accounting for its Plans. Had
the Company  determined  compensation  cost based on the fair value at the grant
date for its stock  options  under SFAS No. 123, the Company's net loss and loss
per share would have been increased to the pro forma amounts indicated below:






                                      F-15

<PAGE>


                       nVIEW CORPORATION AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements

<TABLE>
<CAPTION>


                                                   1997                     1996                   1995
                                                   ----                     ----                   ----
<S> <C>

Net loss:
   As reported                                    ($9,308,892)              ($805,283)            ($7,777,245)
   Pro Forma                                      ($9,515,569)            ($1,076,951)            ($8,015,716)
Basic net loss per share:
   As reported                                         ($1.86)                 ($0.16)                 ($1.59)
   Pro forma                                           ($1.90)                 ($0.22)                 ($1.64)
Diluted net loss per share:
   As reported                                         ($1.86)                 ($0.16)                 ($1.59)
   Pro forma                                           ($1.90)                 ($0.22)                 ($1.64)

</TABLE>

         Pro forma net loss and net loss per share reflect only options  granted
in 1997, 1996 and 1995. Therefore,  the full impact of calculating  compensation
cost for stock  options under SFAS No. 123 is not reflected in the pro forma net
loss and net loss per share amounts presented above for options granted prior to
January 1, 1995.

Stock option activity during the periods indicated is as follows:

<TABLE>
<CAPTION>

                                             Number of         Weighted-Average
                                              Shares             Exercise Price
                                              ------             --------------
<S> <C>

Balance at December 31, 1994                       226,710           $6.15
  Granted                                          281,500            6.19
  Exercised                                         11,400            4.98
  Canceled                                          64,700            6.28
           Balance at December 31, 1995            432,110            6.20
   Granted                                         250,700            4.32
   Exercised                                       100,925            5.60
   Canceled                                        235,840            6.00
Balance at December 31, 1996                       346,045            5.21
   Granted                                         164,988            2.59
   Exercised                                           ---            ---
   Canceled                                         94,260            4.40
Balance at December 31, 1997                       416,773            4.36

</TABLE>





                                      F-16

<PAGE>


                       nVIEW CORPORATION AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements



The following table summarizes  information  about stock options  outstanding at
December 31, 1997:

<TABLE>
<CAPTION>

                                              Options Outstanding                                         Options Exercisable
                      --------------------------------------------------------------------       ----------------------------------
                                                  Weighted average             Weighted             Number of              Weighted
    Range of                Number                   remaining                 average                shares               average
    exercise             Outstanding              contractual life             exercise            exercisable             exercise
     prices              at 12/31/97                  (years)                   price              at 12/31/97              price
----------------      ------------------      ------------------------      --------------       ----------------      ------------

<S> <C>

      $1.07-1.07                  21,488                5.75                    $1.07                           0           $0.00
       1.96-2.28                  89,500                5.53                    $2.13                      12,000           $2.28
       3.49-4.53                 127,675                4.57                    $3.90                      86,175           $3.80
       5.51-7.78                 178,110                3.87                    $6.21                     132,110           $6.27
----------------      ------------------      ------------------------      --------------       ----------------      ------------
       1.07-7.78                 416,773                4.53                    $4.36                     230,285           $5.14

</TABLE>

(9)      Income Taxes

         Income tax benefit  attributable to income from  continuing  operations
for the year ended December 31, 1995 consisted of:

                                                           1995
                                                           ----
Current tax expense (benefit):
     U.S. Federal                                          ($428,765)
     State                                                  (140,000)

Deferred tax expense (benefit):
     U.S. Federal                                             514,000
     State                                                    20,000
                                                              ------
                                                            ($34,765)
                                                            =========

         No tax benefit or expense was recorded in 1997 or 1996.







                                      F-17

<PAGE>


                       nVIEW CORPORATION AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements


         A reconciliation  of the components of income tax benefit for the years
ended December 31, 1997, 1996 and 1995,  computed at the statutory U.S.  Federal
income tax rate of 34% in 1997, 1996 and 1995 is summarized as follows:

<TABLE>
<CAPTION>

                                                         1997              1996               1995
                                                         ----              ----               ----

<S> <C>

Income tax benefit at Federal
     statutory rate                                     ($3,165,000)        ($273,800)       ($2,656,000)
Increase (decrease) resulting from:
     Change in the valuation allowance
        for deferred tax assets                            3,485,000           315,000          2,906,000
     State income tax benefit, net of
        effect of Federal income taxes                     (285,000)          (20,700)           (87,000)
    Stock options exercised                                      ---          (71,700)            (4,000)
    Other                                                   (35,000)           51,200           (193,765)
                                                            --------        ----------          ---------
       Total tax expense (benefit)                    $          ---   $           ---          ($34,765)
                                                     ===============   ===============          =========

</TABLE>


         The tax effects of temporary  differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at December 31,
1997 and 1996 are presented below:

<TABLE>
<CAPTION>


Deferred tax assets:                                                             1997             1996
                                                                                 ----             ----
<S> <C>

  Accounts receivable, principally due to allowance for doubtful
      accounts, and sales returns and allowances                                    158,000          $91,000
  Inventories, principally due to inventory write downs
      and amounts capitalized for tax purposes                                    2,061,000        1,330,000
  Warranties, principally due to accrual for financial reporting
      purposes                                                                       75,000           75,000
  Other accrued expenses, principally due to accruals for financial
      reporting purposes                                                            163,000          117,000
  Property and equipment, principally due to differences in
      depreciation                                                                  244,000          202,000
  Net operating loss, alternative minimum tax credit and general
      business credit carryforwards                                               4,489,000       1,890,000
                                                                                  ---------       ---------
         Total gross deferred tax assets                                          7,190,000       3,705,000
 Less valuation allowance                                                       (7,190,000)      (3,705,000)
                                                                                 ----------     ------------
               Net deferred tax assets                                        $         ---     $        ---
                                                                              -------------     ------------

</TABLE>


         The valuation  allowance for the years ended December 31, 1997 and 1996
increased $3,485,000 and $315,000, respectively. The Company continually reviews
the adequacy of the valuation  allowance and is recognizing  these benefits only
as a reassessment,  indicating that it is more likely than not that the benefits
will be realized.

         At December 31, 1997, the Company has net operating loss  carryforwards
for federal income tax purposes of approximately $11,000,000 which are available
to offset future federal taxable income,  if any, through 2011. The Company also
has an  alternative  minimum  tax  credit  of  approximately  $60,000,  which is
available  to offset  future  federal  regular  income  taxes,  if any,  over an
indefinite period. Additionally,  the Company has a research and development tax
credit carryforward of $248,000 which is available to offset future federal
regular income taxes, if any, through 2009.



                                      F-18

<PAGE>


                       nVIEW CORPORATION AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements

(10)     Retirement Savings Plan

         The Company has a retirement  savings  (401k) plan.  All  employees who
have  completed 90 days of service are eligible  under the plan (as amended) and
after one year of service,  matching  contributions are provided by the Company.
Eligible employees may contribute up to 15% of their compensation  annually with
the  Company  providing  an  additional   contribution  equal  to  the  employee
contribution,  not to exceed 6% of compensation. The Company also has the option
of making a discretionary contribution as determined by the Company. The Company
expensed  contributions  of  $53,889,  $48,051,  and  $114,604  relating  to the
retirement  savings plan for the years ended  December 31, 1997,  1996 and 1995,
respectively.

(11)     Subsequent Event

         On January 21,  1998,  the  Company  signed an  agreement  with Snell &
Wilcox Limited ("S&W").  Under the terms of the agreement,  S&W will develop and
manufacture a certain  component  (the "S&W  component")  for use in nVIEW's new
product  which  is  under  development.  Upon  nVIEW's  acceptance  of  the  S&W
component, S&W will receive 750,000 shares of nVIEW's common stock. The delivery
date for the S&W  component  as stated in the  agreement  is May 15,  1998.  The
750,000  shares will be reduced in  accordance  with the  "penalty  schedule" as
described  in the  agreement if S&W fails to meet  certain  time  deadlines  for
delivery and  acceptance of the S&W  component.  Additionally,  S&W will receive
250,000  additional shares of nVIEW's common stock if nVIEW orders between 1,000
and 2,000 units of the S&W  component.  If nVIEW orders more than 2,000 units of
the S&W  component,  S&W will receive an  additional  500,000  shares of nVIEW's
common stock.

(12)     Geographic Information (Unaudited)

         The following  table presents sales by geographic  area for each of the
years ended December 31, 1997, 1996 and 1995:

                                      F-19

<PAGE>

<TABLE>
<CAPTION>

                                    1997                 1996                 1995
                                    ----                 ----                 ----
<S> <C>


United States                        $10,949,218          $18,080,863         $23,386,240
Europe                                 4,738,821           11,990,178           5,839,614
Pacific Rim                            1,689,659            2,090,433           2,264,254
Other International                    2,506,007            2,363,088           1,385,692
                                  --------------        -------------       -------------

Consolidated                         $19,883,705          $34,524,562         $32,875,800
                                     ===========          ===========         ===========





                                      F-20

<PAGE>


                       nVIEW CORPORATION AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements


 (12)      Quarterly Results of Operations (Unaudited)


</TABLE>
<TABLE>
<CAPTION>

                                                                          Quarter
                                           ======================================================================

                                                 First           Second            Third             Fourth
                                                 -----           ------            -----             ------

<S> <C>

1997
----
Sales                                             $7,163,449        5,197,395         3,464,537         4,058,324
Gross profit                                       1,625,249          409,808       (1,781,230)       (1,945,426)
Net loss                                           (158,178)      (1,356,022)       (3,842,224)       (3,952,469)

Weighted average common
shares outstanding                                 5,005,166        5,005,166         5,005,166         5,005,166
Net loss per share - basic and diluted         $      (0.03)           (0.27)            (0.77)            (0.79)

1996
----
Sales                                             $7,489,438        7,371,031         8,483,201        11,180,892
Gross profit                                       1,312,365        1,911,158         1,902,807         1,929,668
Net earnings (loss)                              (1,096,632)           17,887            28,846           244,615

Weighted average common
shares outstanding - basic                         4,904,241        4,922,488         4,936,416         5,002,688
Weighted average common and
potentially dilutive shares outstanding -
diluted                                            4,904,241        4,983,588         4,969,491         5,015,367
Net earnings (loss) per share - basic
and diluted                                   $       (0.22)             0.00              0.01              0.05

1995
----
Sales                                             $8,421,795        9,612,615         7,113,271         7,728,119
Gross profit                                       2,762,169        2,673,246           634,401            12,156
Net loss                                           (592,397)        (711,347)       (2,820,776)       (3,652,725)

Weighted average common
shares outstanding                                 4,893,918        4,895,998         4,901,024         4,904,241
Net loss per share - basic and diluted         $      (0.12)           (0.15)            (0.58)            (0.74)

</TABLE>









                                      F-21

<PAGE>


                       nVIEW Corporation and Subsidiaries
                       Valuation and Qualifying Accounts
                  For the Three Years ended December 31, 1997

<TABLE>
<CAPTION>

                                             Balance at         Charged to                                Balance
                                            beginning of         costs and                               at end of
             Description                       period            expenses           Deductions             period
=====================================     ================    ===============   ==================    ================

<S> <C>

Year ended December 31, 1997:

     Allowance for doubtful accounts              $240,000            266,069               90,349            $415,720

Year ended December 31, 1996:

     Allowance for doubtful accounts              $390,000           (40,114)              109,886            $240,000

Year ended December 31, 1995:

     Allowance for doubtful accounts              $300,000            141,735               51,735            $390,000

</TABLE>







                                      F-22

<PAGE>