<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

(Mark One)

         /X/      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                           THE SECURITIES EXCHANGE ACT OF 1934

                  For The Quarterly Period Ended:    May 31, 2000
                                                     ------------

         / /      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                           THE SECURITIES EXCHANGE ACT OF 1934

                  For The Transition Period From_______To______

         Commission File Number: 0-14779
                                 -------

                                 MEDIA 100 INC.
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)


              DELAWARE                                     04-2532613
  ---------------------------------                   ----------------------
  (State or other jurisdiction                        (I.R.S. Employer
  of organization or incorporation)                   Identification Number)

                           290 DONALD LYNCH BOULEVARD
                           MARLBOROUGH, MASSACHUSETTS
             ------------------------------------------------------
                    (Address of principal executive offices)

                                   01752-4748
             ------------------------------------------------------
                                   (Zip code)

                                 (508) 460-1600
             ------------------------------------------------------
              (Registrant's telephone number, including area code)

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

  Common Stock, par value $.01 per share           12,080,568 shares
  --------------------------------------     ----------------------------
                 Class                       Outstanding at June 30, 2000


<PAGE>

                         MEDIA 100 INC. AND SUBSIDIARIES

                                      INDEX

<TABLE>
<CAPTION>

                                                                                                   PAGE
                                                                                                  NUMBER
                                                                                                  ------
<S>                                                                                              <C>
PART I - FINANCIAL INFORMATION
    ITEM 1      Consolidated Financial Statements:
                Consolidated Balance Sheets as of
                   May 31, 2000 and November 30, 1999                                               3

                Consolidated Statements of Operations for the three and
                   six months ended May 31, 2000 and May 31, 1999                                   4

                Consolidated Statements of Cash Flows for the six
                   months ended May 31, 2000 and May 31, 1999                                     5 - 6

                Notes to Consolidated Financial Statements                                        7 - 15

    ITEM 2      Management's Discussion and Analysis of Financial
                   Condition and Results of Operations                                           16 - 23

    ITEM 3      Quantitative and Qualitative Disclosures about Market Risk                          23


PART II - OTHER INFORMATION
    ITEM 1      Legal Proceedings                                                                   24

    ITEM 2      Change in Securities and Use of Proceeds                                            24

    ITEM 4      Submission of Matters to a Vote of Security Holders                              24 - 25

    ITEM 6      Exhibits and Reports on Form 8-K                                                    25

SIGNATURES                                                                                          26

EXHIBIT INDEX                                                                                    27 - 28

</TABLE>



                                       2
<PAGE>

                         PART I - FINANCIAL INFORMATION

                         MEDIA 100 INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                                 (in thousands)
                                   (unaudited)

<TABLE>
<CAPTION>

                                                                                                   May 31,          November 30,
                                                                                                    2000                1999
                                                                                             -----------------  -----------------
<S>                                                                                          <C>                <C>
ASSETS
Current assets:
               Cash and cash equivalents                                                     $           9,321  $          13,858
               Marketable securities                                                                    16,329             18,169
               Accounts receivable, net of allowance for doubtful
                 accounts of $4,151 in 2000 and $4,160 in 1999                                           8,791              8,376
               Inventories                                                                               4,932              1,689
               Prepaid expenses                                                                          1,612              1,246
                                                                                             -----------------  -----------------
                    Total current assets                                                                40,985             43,338

Property and equipment, net                                                                              6,948              7,235
Intangible assets, net                                                                                   6,026              1,560
Other assets, net                                                                                        1,733                605
                                                                                             -----------------  -----------------
Total assets                                                                                 $          55,692  $          52,738
                                                                                             =================  =================

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
               Accounts payable                                                              $           4,415  $           4,683
               Accrued expenses                                                                         11,999             10,532
               Note payable                                                                              1,439                  -
               Deferred revenue                                                                          5,224              5,193
                                                                                             -----------------  -----------------
                    Total current liabilities                                                           23,077             20,408

Contingencies (Note 10)

Stockholders' equity:
               Preferred stock                                                                               -                  -
               Common stock                                                                                121                115
               Capital in excess of par value                                                          215,280            210,839
               Accumulated deficit                                                                    (182,455)          (178,418)
               Accumulated other comprehensive income (loss):
                 Cumulative translation adjustment                                                           3                  5
                 Unrealized holding loss on available for sale securities                                 (334)              (211)
                                                                                             -----------------  -----------------

                    Total stockholders' equity                                                          32,615             32,330
                                                                                             -----------------  -----------------

Total liabilities and stockholders' equity                                                   $          55,692  $          52,738
                                                                                             =================  =================

</TABLE>


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


                                       3
<PAGE>

                         MEDIA 100 INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                      (in thousands, except per share data)

                                   (unaudited)

<TABLE>
<CAPTION>

                                                         Three Months Ended May 31,               Six Months Ended May 31,
                                                          2000                1999               2000                 1999
                                                    --------------      -------------      ---------------    -----------------
<S>                                                 <C>                 <C>                <C>                <C>
  Net sales:
     Products                                       $       18,277      $      13,329      $        33,932    $          25,871
     Services                                                2,300              2,137                4,565                4,272
                                                    --------------      -------------      ---------------    -----------------
  Total net sales                                           20,577             15,466               38,497               30,143

  Cost of sales                                              8,358              5,979               15,894               11,737
                                                    --------------      -------------      ---------------    -----------------

       Gross profit                                         12,219              9,487               22,603               18,406
                                                    --------------      -------------      ---------------    -----------------

  Operating expenses:
       Research and development                              3,961              3,755                7,609                8,425
       Selling and marketing                                 5,516              4,742               10,643                9,194
       General and administrative                            2,411              1,702                4,963                3,354
       Amortization of intangible assets                       563                  -                  836                    -
       Acquired in-process research
           and development                                       -                  -                  470                    -
       Merger related costs                                  2,007                  -                2,007                    -
                                                    --------------      -------------      ---------------    -----------------
          Total operating expenses                          14,458             10,199               26,528               20,973
                                                    --------------      -------------      ---------------    -----------------

       Operating loss                                       (2,239)              (712)              (3,925)              (2,567)

  Interest income, net                                         275                339                  591                  676
  Other income (expense), net                                 (152)             1,633                 (171)               5,254
                                                    --------------      -------------      ---------------    -----------------

       Income (loss) before tax provision                   (2,116)             1,260               (3,505)               3,363

  Tax provision                                                  -                  -                   30                    -
                                                    --------------      -------------      ---------------    -----------------

       Net income (loss)                            $      (2,116)      $       1,260      $       (3,535)    $           3,363
                                                    =============       =============      ==============     =================

  Net income (loss) per share:
     Basic                                          $        (.18)      $         .11      $         (.30)    $             .30
                                                    =============       =============      ==============     =================

     Diluted                                        $        (.18)      $         .11      $         (.30)    $             .29
                                                    =============       =============      ==============     =================

  Weighted average common shares outstanding:
     Basic                                                 11,991              11,254              11,807                11,251
                                                    =============       =============      ==============     =================

    Diluted                                                11,991              11,669              11,807                11,600
                                                    =============       =============      ==============     =================

</TABLE>


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



                                       4
<PAGE>

                         MEDIA 100 INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)
                                   (unaudited)

<TABLE>
<CAPTION>

                                                                                          Six Months Ended May 31,
                                                                                            2000          1999
                                                                                          --------      --------
<S>                                                                                       <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income (loss)                                                                       $ (3,535)     $  3,363
  Adjustments to reconcile net income (loss) to net cash
   provided by (used in) operating activities:
                Depreciation and amortization                                                1,771         1,822
                Non-cash interest expense                                                       44             -
                Acquired in-process research and development                                   470             -
                Amortization of acquisition-related intangible assets                          836             -
                Loss on disposition of fixed asset                                               6             -
                Gain on the sale of the Color Server Group and other assets to                   -        (2,485)
                   Splash
                Gain on monitor license and sale of other assets to KDS                          -        (2,135)
                Gain on sale of marketable securities                                            -           (16)
  Changes in Assets and Liabilities, excluding effects of acquisitions:
                Accounts Receivable                                                         (1,401)         (960)
                Inventories                                                                 (2,615)         (364)
                Prepaid expenses                                                              (358)          (31)
                Accounts payable                                                               399          (471)
                Accrued expenses                                                               175        (3,133)
                Deferred revenue                                                                31        (2,569)
                                                                                          --------      --------
  Net cash used in operating activities                                                   $ (4,177)     $ (6,979)
                                                                                          --------      --------

CASH FLOWS FROM INVESTING ACTIVITIES:
                Acquisition of Wired, Inc., net of cash acquired                            (1,487)            -
                Acquisition of 21st Century Media Inc., net of cash acquired                  (481)            -
                Purchases of property and equipment                                         (1,058)       (1,096)
                Other assets                                                                (1,162)         (120)
                Purchase of intangible assets                                                 (174)            -
                Net proceeds on the sale of the Color Server Group and other assets              -         2,485
                   to Splash
                Note Receivable                                                                  -         2,100
                Net proceeds from the monitor license and sale of other assets to KDS            -         2,135
                Purchases of marketable securities                                         (14,310)      (22,407)
                Proceeds from sales of marketable securities                                16,027        26,079
                                                                                          --------      --------
  Net cash provided by (used in) investing activities                                     $ (2,645)     $  9,176
                                                                                          --------      --------

CASH FLOWS FROM FINANCING ACTIVITIES:

                Proceeds from short term borrowings, net                                         -        (1,340)
                Proceeds from issuance of common stock pursuant to stock plans               3,770           289
                Purchase of treasury stock                                                       -          (236)
                                                                                          --------      --------
  Net cash provided by (used in) financing activities                                     $  3,770      $ (1,287)
                                                                                          --------      --------

EFFECT OF EXCHANGE RATE CHANGES ON CASH                                                         (2)         (185)
NET DECREASE IN CASH DURING EXCLUDED PRE-MERGER PERIOD (Note 4b)                            (1,483)            -
                                                                                          --------      --------

NET (DECREASE)  INCREASE IN CASH AND CASH EQUIVALENTS                                     $ (4,537)     $    725

CASH AND CASH EQUIVALENTS, beginning of period                                              13,858         7,849
                                                                                          --------      --------

CASH AND CASH EQUIVALENTS, end of period                                                  $  9,321      $  8,574
                                                                                          ========      ========

</TABLE>



                                       5
<PAGE>

<TABLE>
<CAPTION>

                                                                                         Six Months Ended May 31,
                                                                                            2000         1999
                                                                                            ----         ----
<S>                                                                                       <C>           <C>
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
   Cash paid for income taxes                                                                    1             2
                                                                                          ========      ========
   Cash paid for interest                                                                 $      -      $     55
                                                                                          ========      ========
OTHER TRANSACTIONS NOT USING CASH:
   Decrease in value of marketable securities                                             $   (123)     $   (364)
                                                                                          ========      ========

</TABLE>

<TABLE>
<CAPTION>

                                                                                         Six Months Ended May 31,
                                                                                            2000         1999
                                                                                            ----         ----
<S>                                                                                       <C>           <C>
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING ACTIVITIES:

Inconnection with the acquisition of Wired, Inc., the following non-cash
  transaction occurred:
Fair value of assets acquired                                                             $  3,180      $      -
Cash paid for acquisition and acquisition costs                                              1,487
                                                                                          --------      --------
Note payable and liabilities assumed                                                      $  1,693      $      -
                                                                                          ========      ========

In connection with the acquisition of 21st Century Media, LLC, the following
  non-cash transaction occurred:
Fair value of assets acquired                                                             $  1,130      $      -
Cash paid for acquisition and acquisition costs                                                481
                                                                                          ========      ========
Common stock issued and liabilities assumed                                               $    649      $      -
                                                                                          ========      ========

</TABLE>


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


                                       6
<PAGE>

                         MEDIA 100 INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                (UNAUDITED, EXCEPT FOR NOVEMBER 30, 1999 AMOUNTS)


1.  Basis of Presentation

The accompanying interim consolidated financial statements include the accounts
of Media 100 Inc. ("the Company"), a Delaware corporation, and its wholly owned
subsidiaries. The interim financial statements are unaudited. However, in the
opinion of management, the interim consolidated financial statements and
disclosures reflect all adjustments necessary for fair presentation. Interim
results are not necessarily indicative of results expected for a full year or
for any other interim period. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with accounting
principles generally accepted in the United States have been condensed or
omitted pursuant to the rules and regulations of the Securities and Exchange
Commission. These consolidated condensed financial statements should be read in
conjunction with the consolidated financial statements and the notes thereto
included in the Company's latest audited financial statements, which are
included in the Company's Annual Report on Form 10-K for the fiscal year ended
November 30, 1999, filed with the Securities and Exchange Commission.

The Company's preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

The Company develops, markets, sells, and supports digital video and web-based
streaming media software and systems, or tools, that enable new Internet
broadcasters and traditional broadcasters, corporate marketing professionals,
and educators to create and deliver high-quality video programs quickly, easily,
and with great creative flexibility. The Company markets and delivers its
products to end users through its web sites as well as through a worldwide
channel of specialized value-added resellers ("VARs") that sell, assemble, and
install turnkey systems using personal computers, disk drives, and ancillary
video equipment. Since the Company began first shipments of its products in
1993, it has shipped over 300,000 software applications and 26,000 systems to
users in over 50 countries.

In June 1999, the Company acquired Terran Interactive Inc. ("Terran"), a leading
supplier of software tools for high quality Internet and DVD video. Through
Terran, the Company now offers powerful and easy-to-use solutions that optimize
and compress dynamic media via the Web, broadband networks, CD-ROM and DVD. In
December 1999, the Company acquired Wired, Inc. ("Wired"), a supplier of Moving
Pictures Experts Group ("MPEG") streaming media production tools for the
Internet and digital video disk ("DVD") authoring (see Note 4). In addition to
delivering Terran's and Wired's products to end users through the Company's
worldwide channel of VARs and distributors, the Company sells the products
acquired in the Terran and Wired acquisitions directly to end users using the
Company's telemarketing groups and its websites.

In April 2000, the Company acquired 21st Century Media, LLC ("21st Century
Media"), a leading provider of encoding, hosting, webcasting, and interactive
production services (See Note 4). Subsequent to the end of the quarter, the
Company announced it completed the acquisition of J2 Digital Media, Inc. ("J2
Digital Media"), another encoding, hosting and streaming media services
provider. After this acquisition, J2 Digital Media Inc.'s operations were
combined with the operations of 21st Century Media, and the Company launched a
new division, called StreamRiver Networks, focused on providing encoding and
hosting services for Internet broadcasters, web designers and digital media
content creators.

In May 2000, the Company completed its merger with Digital Origin, Inc.
("Digital Origin"). Digital Origin is a leading developer of digital video
editing and effects software applications designed to support the new low-cost,
high-quality digital video ("DV") camcorders used for acquiring video for
Internet applications (see Note 4b).

2.  Principles of Consolidation

The consolidated financial statements include the Company and its subsidiaries.
All material intercompany transactions and balances have been eliminated in
consolidation.

3.  Reclassifications

Certain amounts in the prior period's financial statements have been
reclassified to conform to the current period's presentation.


                                       7
<PAGE>

4.  Acquisitions

a.) 21ST CENTURY MEDIA, LLC

In April 2000, the Company acquired 21st Century Media. In connection with the
acquisition, the Company paid $500,000 in cash and issued 30,000 shares of
common shares for all outstanding shares of 21st Century Media common stock. In
connection with the acquisition, the purchase price could increase depending on
21st Century Media's net sales and operating income over the next two years. Any
contingent payments based on meeting the earn-out conditions will be considered
additional goodwill and amortized over the appropriate useful life. The Company
has treated the acquisition as a purchase for accounting purpose; accordingly,
the Company has recorded the results of operations of 21st Century Media's
operations since the acquisition date. The Company has not included pro forma
results as they are not deemed to be material.

The aggregate purchase price consisted of the following (in thousands):

<TABLE>
<CAPTION>

        Description                                              Amount
        -----------                                              ------
<S>                                                              <C>
        Cash                                                     $   449
        Liabilities assumed                                           11
        Common stock                                                 638
        Acquisition costs                                             32
                                                                 -------
               Total purchase price                              $ 1,130
                                                                 =======

</TABLE>

The purchase price has been allocated to the acquired assets as follows (in
thousands):

        Current assets                                           $    35
        Equipment and other assets                                   100
        Goodwill                                                     995
                                                                 -------
                                                                 $ 1,130
                                                                 =======

b.) DIGITAL ORIGIN

On May 9, 2000, the Company completed its merger with Digital Origin. Under
the terms of the agreement, Digital Origin's shareholders and option holders
received 0.5347 equivalent shares, or approximately 3.7 million Media 100
common shares, to effect the business combination. The transaction is being
accounted for as a pooling of interests. As a result, all periods presented
have been restated to reflect the combined operations of the two companies.
As permitted by Accounting Principles Board Opinion No.16 BUSINESS
COMBINATIONS (APB No.16), the November 30, 1999 balance sheet presented
herein reflects the combination of the Media 100's November 30, 1999 balance
sheet and Digital Origin's September 30, 1999 balance sheet. Likewise, the
statements of operations and cash flows reflected for the combined companies
are the companies first and second fiscal quarters, which also differ by two
months. In fiscal 2000, the balance sheet is as of May 31, 2000 for the
combined company and the statements of operations and cash flows represent
the three and six-month periods ended May 31, 2000 for both companies. The
results of operations for Digital Origin for the two months ended November
30, 1999 has been excluded from the statement of operations and has been
recorded directly to accumulated deficit as permitted by APB No.16. Net cash
flows for Digital Origin for the two months ended November 30, 1999 have been
included in the statement of cash flows as a single line item.

Results for Digital Origin for the two month period ended November 30, 1999
which has been recorded directly to accumulated deficit were as follows:

<TABLE>
<CAPTION>

                                                                 Two months ended
                                                                 November 30, 1999
                                                                -------------------
<S>                                                             <C>
           Sales                                                $             1,953
           Cost of sales                                                        719
                                                                -------------------
               Gross profit                                                   1,234
           Operating expenses                                                 1,695
                                                                -------------------
               Operating loss                                                  (461)
           Other income (expense), net                                          (41)

               Net loss                                         $              (502)
                                                                ===================

</TABLE>


                                       8
<PAGE>

4.  Acquisitions (continued)

As part of the transaction, the Company incurred direct, merger-related costs of
approximately $2.0 million, consisting primarily of investment bank fees, legal
and accounting fees. All such costs have been expensed in the quarter ended May
31, 2000, upon consummation of the Digital Origin merger.

Separate and combined results of Media 100 and Digital Origin during the periods
preceding the merger were as follows:

<TABLE>
<CAPTION>

                                                              Media 100     Digital Origin     Eliminations      Combined
                                                          ----------------  ---------------  --------------- ---------------
<S>                                                        <C>               <C>              <C>              <C>
       (THREE MONTHS ENDED MAY 31, 2000)(a)

       Net sales                                           $     17,165      $      3,797     $      (385)     $     20,577
       Net income (loss)                                   $     (2,175)     $         (1)    $         60     $    (2,116)

       (SIX MONTHS ENDED MAY 31, 2000)(b)

       Net sales                                                 31,647             7,373            (523)         (38,497)
       Net income (loss)                                        (2,067)           (1,436)             (32)          (3,535)

       (THREE MONTHS ENDED MAY 31, 1999)

       Net sales                                                 12,537             2,929                -           15,466
       Net income (loss)                                            177             1,083                -            1,260

       (SIX MONTHS ENDED MAY 31, 1999)

       Net sales                                           $     24,676      $      5,467     $          -     $     30,143
       Net income (loss)                                   $      (512)      $      3,875     $          -     $      3,363

</TABLE>

      (a) Digital Origin results represent March 1, 2000 through May 9, 2000.
      Results subsequent to May 9, 2000 included in Media 100 results.

      (b) Digital Origin results represent December 1, 1999 through May 9, 2000.
      Results subsequent to May 9, 2000 included in Media 100 results.

c.) J2 DIGITAL MEDIA, INC.

Subsequent to the end of the quarter, the Company announced it completed the
acquisition of J2 Digital Media, a New York-based encoding, hosting and
streaming media services provider. After this acquisition, J2 Digital Media's
operations were combined with the operations of 21st Century Media, and the
Company launched a new division, called StreamRiver Networks, focused on
providing encoding and hosting services for Internet broadcasters, web designers
and digital media content creators.

5. Cash Equivalents and Marketable Securities

Cash equivalents are carried at cost, which approximates market value, and have
original maturities of less than three months. Cash equivalents primarily
include money market accounts. The Company accounts for marketable securities in
accordance with Statement of Financial Accounting Standards No. 115, ACCOUNTING
FOR CERTAIN INVESTMENTS IN DEBT AND EQUITY SECURITIES (SFAS No. 115). Under this
standard, the Company is required to classify all investments in debt and equity
securities into one or more of the following three categories: held-to-maturity,
available-for-sale or trading. Available-for-sale securities are recorded at
fair market value with unrealized gains and losses excluded from earnings and
reported as a separate component of stockholders' equity. All of the Company's
marketable securities are classified as available-for-sale.


                                       9
<PAGE>

5. Cash Equivalents and Marketable Securities (continued)

Marketable securities held as of May 31, 2000 and November 30, 1999 consist of
the following (in thousands):

<TABLE>
<CAPTION>

                                                              Maturity                  2000           1999
        Investments available for sale:
<S>                                                        <C>                     <C>            <C>
        U.S. Treasury Notes                                less than 1 year        $     1,009    $           -
        U.S. Treasury Notes                                1 - 5 years                   3,477            4,538
                                                                                   -----------    -------------
           Total U.S. Treasury Notes                                                     4,486            4,538

        Municipal Bonds                                    less than 1 year                930            1,797

        U.S. Agency Bonds                                  less than 1 year              3,024                -
        U.S. Agency Bonds                                  1 - 5 years                     974            3,008
                                                                                   -----------    -------------
           Total U.S. Agency Bonds                                                       3,998            3,008

        Money Market Instruments                           less than 1 year              1,199            3,689

        Corporate Obligations                              less than 1 year              3,438            4,042
        Corporate Obligations                              1 - 5 years                   3,477            4,784
                                                                                   -----------    -------------
           Total Corporate Obligations                                                   6,915            8,826

        Total investments available for sale                                            17,528           21,858
        Less: cash and cash equivalents                                                 (1,199)          (3,689)
                                                                                   -----------    -------------

           Total marketable securities                                             $    16,329    $      18,169
                                                                                   ===========    =============

</TABLE>

Marketable securities had a cost of $16,663 and $18,380, and a market value of
$16,329 and $18,169 at May 31, 2000 and November 30, 1999, respectively.

6.  Inventories

Inventories are stated at the lower of first-in, first-out (FIFO) cost or market
and consist of the following (in thousands):

<TABLE>
<CAPTION>

                                                                 May 31,          November 30,
                                                                  2000                1999
                                                             -------------      ---------------
<S>                                                          <C>                <C>
           Raw materials                                     $       2,104      $           556
           Work-in-process                                           1,146                  498
           Finished goods                                            1,682                  635
                                                             -------------      ---------------
                                                             $       4,932      $         1,689
                                                             =============      ===============

</TABLE>

Work-in-process and finished goods inventories include material, labor and
manufacturing overhead. Management performs periodic reviews of inventory and
disposes of items not required by their manufacturing plan.

7. Property and equipment, net

Property and equipment, net is stated at cost, less accumulated depreciation and
amortization, and consists of the following (in thousands):

<TABLE>
<CAPTION>

                                                                      May 31,         November 30,
                                                                       2000               1999
                                                                  -------------      --------------
<S>                                                               <C>                <C>
       Machinery and equipment                                    $      12,589      $       11,535
       Purchased software                                                 6,986               8,026
       Furniture and fixtures                                             1,612               1,606
       Vehicles                                                              11                  11
       Leasehold improvements                                             1,606               1,599
                                                                  -------------      --------------
                                                                  $      22,804              22,777
       Less accumulated depreciation and amortization                   (15,856)            (15,542)
                                                                  -------------      --------------
                                                                  $       6,948      $        7,235
                                                                  =============      ==============

</TABLE>


                                       10
<PAGE>

8.  Intangible Assets, net

Intangible assets consist of the following as of May 31, 2000 and November 30,
1999 (in thousands):

<TABLE>
<CAPTION>

                                                                      May 31,          November 30,
                                                                       2000               1999
                                                                  -------------      ---------------
<S>                                                               <C>                <C>
       Patents and Trademarks                                     $         344      $           169
       Acquired Technology                                                2,460                1,560
       Goodwill                                                           4,379                  101
                                                                  -------------      ---------------
                                                                          7,183                1,830
       Less accumulated amortization                                    (1,157)                (270)
                                                                  -------------      ---------------
                                                                  $       6,026      $         1,560
                                                                  =============      ===============

</TABLE>

Patents and trademarks are being amortized over periods ranging from three to
five years, their estimated useful lives. The Company is amortizing goodwill and
acquired technology related to each of its acquisitions using the straight-line
method over three years, their estimated useful lives. In connection with a
prior business combination, the Company has accrued $1,750,000 as additional
goodwill. The Company will amortize this additional goodwill over its remaining
useful life.

9.  Net Income (Loss) Per Share

Effective December 1, 1997, the Company adopted Statement of Financial
Accounting Standards No. 128, EARNINGS PER SHARE (SFAS No. 128). In accordance
with SFAS No. 128, basic net income (loss) per share is computed by using the
weighted-average number of common shares outstanding. Diluted income (loss) per
share is computed by using the weighted-average number of common shares
outstanding and potential common shares from the assumed exercise of stock
options and warrants outstanding during the period, if any, using the treasury
stock method.

The following is a reconciliation of the shares used in the computation of basic
and diluted net income (loss) per share (in thousands):

<TABLE>
<CAPTION>

                                                                Three months ended May 31,       Six months ended May  31,
                                                                    2000            1999           2000           1999
                                                              ---------------- ------------- --------------- --------------
<S>                                                           <C>              <C>           <C>             <C>
       Basic net income (loss)  - weighted average
          common outstanding                                            11,991        11,254          11,807         11,251

       Effect of potential common shares - stock options
          and warrants outstanding (unless antidilutive)                     -           415               -            349
                                                              ---------------- ------------- --------------- --------------

       Diluted net income (loss)  - weighted average shares
          and potential common shares outstanding                       11,991        11,669          11,807         11,600
                                                              ================ ============= =============== ==============

       Options not included in computation of diluted
          net income (loss) per share due to their
          antidilutive effect                                                2           463              11            723
                                                              ================ ============= =============== ==============

</TABLE>

10.  Contingencies

(a)  On June 7, 1995, a lawsuit was filed against the Company by Avid
     Technology, Inc. ("Avid") in the United States District Court for the
     District of Massachusetts. The complaint generally alleges patent
     infringement by the Company arising from the manufacture, sale, and use of
     the Company's Media 100 products. The complaint includes requests for
     injunctive relief, treble damages, interest, costs and fees. In July 1995,
     the Company filed an answer and counterclaim denying any infringement and
     asserting that the Avid patent in question is invalid. The Company intends
     to vigorously defend the lawsuit. In addition, Avid is seeking reissue of
     the patent, including claims that it asserts are broader than in the
     existing patent, and these reissue proceedings remain pending before the
     U.S. Patent and Trademark Office. On January 16, 1998, the court dismissed
     the lawsuit without prejudice to either party moving to restore it to the
     docket upon completion of all matters pending before the U.S. Patent and
     Trademark Office. There can be no assurance that the Company will prevail
     in the lawsuit asserted by Avid or that the expense or other effects of the
     lawsuit, whether or not the Company prevails, will not have a material
     adverse effect on the Company's business, operating results and financial
     condition.



                                       11
<PAGE>


10.  Contingencies (continued)

(b)  On January 13, 1999 and January 28, 1999, Digital Origin and one of its
     former directors, Charles Berger, were named as defendants in two
     shareholder class action lawsuits against Splash Technology Holdings, Inc.
     ("Splash"), various directors and executives of Splash and certain selling
     shareholders of Splash. The lawsuit alleges, among other things, that the
     defendants made or were responsible for material misstatements, and failed
     to disclose information concerning Splash's business, finances and future
     business prospects in order to artificially inflate the price of Splash
     common stock. The complaint does not identify any statements alleged to
     have been made by Charles Berger or the Company. The complaint further
     alleges that the Company engaged in a scheme to artificially inflate the
     price of Splash common stock to reap an artificially large return on the
     sale of the common stock in order to pay off its debt. Digital Origin and
     the former director vigorously deny all allegations of wrongdoing and
     intend to aggressively defend themselves in these matters. Defendant's
     initial motion to dismiss the action was granted with leave to amend, and
     plaintiffs have amended the complaint. Defendants have filed their second
     motion to dismiss.

(c)  On July 18, 1997, Intelligent Electronics, Inc. and its alleging a breach
     of contract and related claims in the approximate amount of $800,000,
     maintaining that Digital Origin failed to comply with various return, price
     protection, inventory balancing and marketing development funding
     undertakings. In 1997, Digital Origin filed an answer to the complaint and
     cross-claimed against the plaintiffs and in October 1997 additionally cross
     claimed against Deutsche Financial, Inc., a factor in the account
     relationship between the Company and the plaintiffs, seeking the recovery
     of approximately $2 million. During May 2000, the trial was completed and
     the Court entered two judgments in favor of Digital Origin, one in the
     amount of $313,795.70 plus interest against Intelligent Electronics and one
     in the amount of $1,490,623 plus interest against Deutsche Financial, Inc.
     Each party has requested that the Court reconsiders various portions of its
     rulings, and an appeal of the final judgment is expected.

(d)  From time to time the Company is involved in other disputes and/or
     litigation encountered in its normal course of business. The Company does
     not believe that the ultimate impact of the resolution of such other
     outstanding matters will have a material effect on the Company's business,
     operating results or financial condition.

11.  Accrued Expenses

Accrued expenses at May 31, 2000 and November 30, 1999 consist of the following
(in thousands):

<TABLE>
<CAPTION>

                                                                            May 31,       November 30,
                                                                             2000             1999
                                                                        -------------    --------------
<S>                                                                     <C>              <C>
       Payroll and related taxes                                        $       2,217    $        3,366
       Accrued warranty                                                           567               611
       Accrued selling and marketing                                              343               484
       Accrued merger costs                                                       417                 -
       Accrued inventory                                                        2,182             1,041
       Accrued contingent acquisition payment                                   1,750                 -
       Accrued legal and other                                                  4,523             5,030
                                                                        -------------    --------------
                                                                        $      11,999    $       10,532
                                                                        =============    ==============

</TABLE>

12.  Comprehensive income (loss)

Effective December 1, 1998, the Company adopted Statement of Financial
Accounting Standards No. 130, REPORTING COMPREHENSIVE INCOME (SFAS No. 130).
SFAS No. 130 establishes standards for the display of comprehensive income
(loss) and its components in a full set of financial statements. Comprehensive
income (loss) includes all changes in equity during a period except those
resulting from the issuance of shares of stock and distributions to
stockholders. SFAS No. 130 requires that an enterprise display the components of
comprehensive income (loss) for each period presented.


                                       12
<PAGE>

12.  Comprehensive income (loss) (continued)

The components of the Company's comprehensive income (loss) were as follows:

<TABLE>
<CAPTION>

                                                     Three months ended May 31,           Six months ended May 31,
                                                     2000                1999             2000               1999
                                              ----------------    ----------------  ---------------   ------------------
<S>                                           <C>                 <C>               <C>               <C>
      Net income (loss)                       $         (2,116)   $          1,260  $        (3,535)  $            3,363
      Cumulative translation adjustment                     (3)              (109)               (2)               (185)
      Unrealized holding loss on
         available for sale securities                     (20)              (112)             (123)               (364)
                                              ----------------    ----------------  ---------------   ------------------
      Comprehensive income (loss)             $         (2,139)   $          1,039  $        (3,660)  $            2,814
                                              ================    ================  ===============   ==================

</TABLE>

13.  Segment Information

In July 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 131, DISCLOSURES ABOUT SEGMENTS OF AN
ENTERPRISE AND RELATED INFORMATION (SFAS No. 131). SFAS No. 131 establishes
standards for public companies to report operating segment information in annual
and interim financial statements filed with the SEC and shareholders effective
for fiscal years beginning after December 15, 1997. Operating segments are
defined as components of an enterprise about which separate financial
information is available that is evaluated regularly by the chief decision
maker, or decision making group, in deciding how to allocate resources and in
assessing performance. The Company's chief operating decision-making group is
composed of the Chief Executive Officer and members of senior management. The
Company's reportable operating segments are Internet tools, digital video
systems and services.

Revenues are attributed to geographic areas based on where the customer is
located. Segment information for the three and six months ended May 31, 2000 and
May 31, 1999 is as follows:

<TABLE>
<CAPTION>

                                                                               Digital
                                           Internet                             Video
                                            Tools           Services           Systems          Corporate          Total
                                         -----------     --------------    ---------------    -----------     ---------------
<S>                                      <C>             <C>               <C>                <C>             <C>
THREE MONTHS ENDED MAY 31, 2000

 Net sales from external customers       $     9,744     $        2,300    $         8,533    $          -    $        20,577
                                         ===========     ==============    ===============    ===========     ===============

 Gross profit                                  5,715              1,939              4,565               -             12,219
                                         ===========     ==============    ===============    ===========     ===============

 Depreciation and amortization                   157                 21                709               -                887
                                         ===========     ==============    ===============    ===========     ===============

 Interest income, net                              -                  -                  -             275                275
                                         ===========     ==============    ===============    ===========     ===============

 Income taxes                            $         -     $            -    $             -    $          -    $             -
                                         ===========     ==============    ===============    ===========     ===============

SIX MONTHS ENDED MAY 31, 2000

 Net sales from external customers       $    17,139     $        4,565    $        16,793    $          -    $        38,497
                                         ===========     ==============    ===============    ===========     ===============

 Gross profit                                  9,950              3,933              8,720               -             22,603
                                         ===========     ==============    ===============    ===========     ===============

 Depreciation and amortization                   308                 39              1,424               -              1,771
                                         ===========     ==============    ===============    ===========     ===============

 Interest income, net                                                                                  591                591
                                         ===========     ==============    ===============    ===========     ===============

 Income taxes                            $         -     $            -    $             -    $         30    $            30
                                         ===========     ==============    ===============    ===========     ===============

</TABLE>



                                       13
<PAGE>

13.  Segment Information (continued)

<TABLE>

<S>                                      <C>             <C>               <C>                <C>             <C>
THREE MONTHS ENDED MAY 31, 1999

 Net sales from external customers       $     2,929     $        2,137    $        10,400    $          -    $        15,466
                                         ===========     ==============    ===============    ============    ===============

 Gross profit                                  1,813              1,782              5,892               -              9,487
                                         ===========     ==============    ===============    ============    ===============

 Depreciation and amortization                    34                 16                868               -                918
                                         ===========     ==============    ===============    ============    ===============

 Interest income, net                              -                  -                  -             339                339
                                         ===========     ==============    ===============    ============    ===============


SIX MONTHS ENDED MAY 31, 1999

 Net sales from external customers       $     5,467     $        4,272    $        20,404    $          -    $        30,143
                                         ===========     ==============    ===============    ============    ===============

 Gross profit                                  3,357              3,615             11,434               -             18,406
                                         ===========     ==============    ===============    ============    ===============

 Depreciation and amortization                    69                 33              1,720               -              1,822
                                         ===========     ==============    ===============    ============    ===============

 Interest income, net                              -                  -                  -             676                676
                                         ===========     ==============    ===============    ============    ===============
</TABLE>


Interest income and income taxes are considered corporate level activities and
are, therefore, not allocated to segments. Management believes transfers between
geographic areas are accounted for on an arms-length basis.

Net sales by geographic area for the three and six months ended May 31, 2000 and
May 31, 1999 were as follows (in thousands):

<TABLE>
<CAPTION>

                                                          Three months ended
                                                        May 31,          May 31,
                                                         2000             1999
                                                    --------------  ----------------
<S>                                                 <C>             <C>
   United States                                    $       12,754  $          9,600
   United Kingdom, Sweden, Denmark and Norway                1,419             1,622
   Germany, Austria and Switzerland                          1,194               606
   France, Spain and Benelux                                 2,126               984
   Japan                                                       782             1,078
   Other foreign countries                                   2,302             1,576
                                                    --------------  ----------------
                                                    $       20,577  $         15,466
                                                    ==============  ================

</TABLE>

<TABLE>
<CAPTION>

                                                            Six months ended
                                                        May 31,          May 31,
                                                         2000             1999
                                                    --------------  ----------------
<S>                                                 <C>             <C>
   United States                                    $       23,399  $         18,946
   United Kingdom, Sweden, Denmark and Norway                2,905             3,073
   Germany, Austria and Switzerland                          2,738             1,314
   France, Spain and Benelux                                 3,439             1,844
   Japan                                                     1,556             1,831
   Other foreign countries                                   4,460             3,135
                                                    --------------  ----------------
                                                    $       38,497  $         30,143
                                                    ==============  ================

</TABLE>



                                       14
<PAGE>


13.  Segment Information (continued)

Long-lived tangible assets by geographic area for the quarters ended May 31,
2000 and November 30, 1999 consist of the following (in thousands):

<TABLE>
<CAPTION>

                                                        May 31,          November 30,
                                                         2000                1999
                                                   ---------------    -----------------
<S>                                                <C>                <C>
   United States                                   $         6,677    $           6,877
   United Kingdom                                              107                  146
   France                                                       74                   89
   Germany                                                      70                   97
   Italy                                                        20                   26
                                                   ---------------    -----------------
                                                   $         6,948    $           7,235
                                                   ===============    =================

</TABLE>


14.  Note Payable

In connection with the acquisition of Wired, the Company agreed to pay $3
million in cash for all outstanding shares of Wired's common stock. The first
payment in the amount of $1.5 million was paid upon completion of the
acquisition and the remaining to be paid on the first anniversary of the
closing. The net present value of this latter payment has been classified on the
balance sheet as a note payable.



                                       15
<PAGE>

                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                       CONDITION AND RESULTS OF OPERATIONS


Overview

Except for the historical information contained herein, the matters discussed in
this Quarterly Report on Form 10-Q are forward-looking statements based on
current expectations, and involve known and unknown risks, uncertainties and
other factors which may cause the actual results, performance or achievements of
the Company, or industry results, to be materially different from those
expressed in such forward-looking statements. The risks and uncertainties
associated with such statements have been described under the heading "Certain
Factors That May Affect Future Results" in this Form 10-Q and the Company's
Annual Report on Form 10-K for the fiscal year ended November 30, 1999.

The Company develops, markets, sells, and supports digital video and web-based
streaming media software and systems, or tools, that enable new Internet
broadcasters and traditional broadcasters, corporate marketing professionals,
and educators to create and deliver high-quality video programs quickly, easily,
and with great creative flexibility. The Company markets and delivers its
products to end users through its web sites as well as through a worldwide
channel of specialized value-added resellers ("VARs") that sell, assemble, and
install turnkey systems using personal computers, disk drives, and ancillary
video equipment. Since the Company began first shipments of its products in
1993, it has shipped over 300,000 software applications and 26,000 systems to
users in over 50 countries.

In June 1999, the Company acquired Terran Interactive Inc. ("Terran") of Los
Gatos, CA, a leading supplier of software tools for high quality Internet and
DVD video. Through Terran, Media 100 now offers powerful and easy-to-use
solutions that optimize and compress dynamic media via the Web, broadband
network, CD-ROM and DVD. In December 1999, the Company acquired Wired, Inc.
("Wired"). Wired is a supplier of Moving Pictures Experts Group ("MPEG")
streaming media production tools for the Internet and digital video disk ("DVD")
authoring. In addition to delivering Terran's and Wired's products to end users
through the Company's worldwide channel of VARs and distributors, the Company
sells the products acquired in the Terran and Wired acquisitions directly to end
users using the Company's telemarketing groups and its website.

In April 2000, the Company acquired 21st Century Media LLC ("21st Century
Media"), a leading provider of encoding, hosting, webcasting, and interactive
production services located in San Francisco, CA. Subsequent to the end of the
quarter, the Company acquired J2 Digital Media Inc. ("J2 Digital Media"), a New
York-based encoding, hosting and streaming provider early in June 2000. With
these acquisitions, Media 100 has entered into the streaming media services
market under the name StreamRiver Networks to provide encoding and hosting
services for Internet broadcasters, web designers and digital media content
creators.

 In May 2000, the Company completed its merger with Digital Origin, Inc.
("Digital Origin"). Digital Origin is a leading developer of digital video
editing and effects software applications designed to support the new
low-cost, high-quality digital video ("DV") camcorders used for acquiring
video for Internet applications. As a result of the merger, all periods
presented have been restated to reflect the combined operations of the two
companies. As permitted by Accounting Principles Board Opinion No.16 BUSINESS
COMBINATIONS (APB No.16), the November 30, 1999 balance sheet presented
herein reflects the combination of the Media 100's November 30, 1999 balance
sheet and Digital Origin's September 30, 1999 balance sheet. Likewise, the
statements of operations and cash flows reflected for the combined companies
are the companies first and second fiscal quarters, which also differ by two
months. In fiscal 2000, the balance sheet is as of May 31, 2000 for the
combined company and the statements of operations and cash flows represent
the three and six-month periods ended May 31, 2000 for both companies. The
results of operations for Digital Origin for the two months ended November
30, 1999 has been excluded from the statement of operations and has been
recorded directly to accumulated deficit as permitted by APB No.16. Net cash
flows for Digital Origin for the two months ended November 30, 1999 have been
included in the statement of cash flows as a single line item.

                                       16
<PAGE>

RESULTS OF OPERATIONS

The following table shows certain consolidated statements of operations data as
a percentage of net sales.

<TABLE>
<CAPTION>

                                                    Three months ended May 31,             Six months ended May 31,
                                                   2000               1999               2000                1999
                                               -------------     --------------     -------------     -----------------
<S>                                            <C>               <C>                <C>               <C>
      Net sales:
         Products                                       88.8%              86.2%             88.1%                 85.8%
         Services                                       11.2               13.8              11.9                  14.2
                                               -------------     --------------     -------------     -----------------
      Total net sales                                  100.0              100.0             100.0                 100.0
      Cost of sales                                     40.6               38.7              41.3                  38.9
                                               -------------     --------------     -------------     -----------------
         Gross profit                                   59.4               61.3              58.7                  61.1
      Operating expenses:
         Research and development                       19.3               24.3              19.8                  28.0
         Selling and marketing                          26.8               30.6              27.6                  30.5
         General and administrative                     11.7               11.0              12.9                  11.1
         Amortization of intangible
                assets                                   2.7                  -               2.2                     -
         Acquired in-process research
                and development                            -                  -               1.2                     -
         Merger related costs                            9.8                  -               5.2                     -
                                               -------------     --------------     -------------     -----------------
                Total operating expenses                70.3               65.9              68.9                  69.6
      Operating loss                                   (10.9)              (4.6)            (10.2)                 (8.5)
      Interest income, net                               1.3                2.2               1.5                   2.3
      Other income (expense), net                       (0.7)              10.5              (0.4)                 17.4
                                               -------------     --------------     -------------     -----------------
      Income (loss) before tax provision               (10.3)               8.1              (9.1)                 11.2
      Tax provision                                        -                  -               0.1                     -
                                               -------------     --------------     -------------     -----------------
      Net income (loss)                                (10.3)%              8.1%             (9.2)%                11.2%
                                               =============     ==============     =============     =================

</TABLE>


Comparison of Second Fiscal Quarter of 2000 to Second Fiscal Quarter of 1999

Net sales. Net sales for the second fiscal quarter ended May 31, 2000 were
$20.6 million an increase of $5.1, or 33.0%, from the same period a year ago.
Net sales from products for the second fiscal quarter ended May 31, 2000 were
$18.3 million, an increase of $4.9 million or 37.1%, from the same period a
year ago. The increase in net sales from products is due primarily to
Internet tool sales from the Company's wholly owned subsidiaries Terran,
Wired and Digital Origin. Internet tools sales for the second fiscal quarter
ended May 31, 2000 increased to $9.7 million from $2.9 million in the same
period a year ago. The Company acquired Terran in June 1999, acquired Wired
in December 1999 and merged with Digital Origin in May 2000. The increase in
sales of Internet tools was offset by a decrease of $1.9 million in digital
video sales to $8.5 million in the second fiscal quarter ended May 31, 2000
from $10.4 million in the same period a year ago. Net sales from services for
the second fiscal quarter ended May 31, 2000 were $2.3 million, an increase
of $.1 million or 7.6%, from the same period a year ago. The increase in net
sales from services is due to new customers purchasing and existing customers
renewing their support contracts, and initial sales from the Company's
recently announced streaming media services division, StreamRiver Networks.

Gross profit. The Company's gross profit increased 28.8% to $12.2 million in
the second fiscal quarter of 2000 from $9.5 million in the second fiscal
quarter of 1999. Overall gross profit as a percentage of net sales was 59.4%
in the second fiscal quarter of 2000 compared to 61.3% in the second fiscal
quarter of 1999, due to the mix of products sold during the period.
Specifically, gross profit as a percentage of net product sales decreased to
53.5% in the second fiscal quarter of 2000 from 56.7% in the second fiscal
quarter of 1999, while gross profit as a percentage of net sales of services
increased to 84.3% in the second fiscal quarter of 2000 from 83.4% in the
second fiscal quarter of 1999.

                                       17
<PAGE>

Research and development. Research and development expenses increased 5.5% to
$4.0 million in the second fiscal quarter of 2000 from $3.8 million in the same
period a year ago. Research and development expenses consist primarily of
salaries and related benefits, consultants, outside services, occupancy and
depreciation. The Company currently anticipates research and development
expenses will increase in absolute dollars in fiscal 2000 versus fiscal 1999 due
to the acquisitions of Terran, Wired and Digital Origin and the planned
development of their products.

Selling and marketing. Selling and marketing expenses increased 16.3% to $5.5
million in the second fiscal quarter of 2000 from $4.7 million in the same
period a year ago. Selling expenses consist primarily of salaries and related
benefits, commissions, travel, occupancy and depreciation. Marketing expenses
consist primarily of salaries and related benefits, trade shows, seminars,
advertising, website development and lead generation activities. The increase in
selling and marketing expenses resulted primarily from the acquisition of Terran
and Wired and the merger with Digital Origin and the Company's promotion of the
streaming media tools acquired as part of these transactions. The Company
currently anticipates that its selling and marketing expenses will increase in
absolute dollars in fiscal 2000 versus fiscal 1999 as the Company increases its
focus on the Internet and the related support of the Company's promotion of its
streaming media tools.

General and administrative. General and administrative expenses increased 41.7%
to $2.4 million in the second fiscal quarter of 2000 from $1.7 million in the
same period a year ago. General and administrative expenses include the cost of
human resources, finance, information technology, legal and other administrative
functions of the Company. The increase in general and administrative expenses
resulted primarily from increased personnel costs as a result of the
acquisitions of Terran and Wired, and legal expenses related to a lawsuit
involving Digital Origin. The Company currently anticipates that its general and
administrative expenses will increase in absolute dollars in fiscal 2000
compared to fiscal 1999 in support of higher anticipated net sales.

Amortization of intangible assets. The Company recorded an expense for the
amortization of intangible assets of $563,000 in the second fiscal quarter of
2000 as a result of the acquisitions of Terran, Wired and 21st Century Media.
There was no similar expense recorded in the second fiscal quarter of 1999.

Merger related costs. In connection with the merger with Digital Origin, the
Company incurred direct, acquisition-related charges of approximately $2.0
million, consisting primarily of investment bank fees, legal and accounting
fees. There was no similar expense recorded in the second fiscal quarter of
1999.

Interest income. Interest income for the second fiscal quarter ended May 31,
2000 was $275,000, a decrease of $64,000, or 18.9%, from the comparable
quarter a year ago. The decrease in interest income is due to lower cash and
cash equivalents and marketable securities in the second fiscal quarter of
2000, compared to the second fiscal quarter of 1999. The Company currently
anticipates interest income will decline in fiscal 2000 versus 1999 due to
additional reductions of cash resulting from the acquisition of Wired and
21st Century Media and an additional cash payment due to the shareholders of
Terran.

Other income (expenses), net. Other income (expense), net was ($152,000) in the
second fiscal quarter of 2000 compared to $1.6 million in the same period a year
ago. The expense of $152,000 relates primarily to foreign exchange losses on
inter-company transactions with the Company's foreign subsidiaries. The income
of $1.6 million relates primarily to the licensing of technology by Digital
Origin of its monitor and color publishing business.

Tax provision. The Company has not provided for a tax provision for the second
fiscal quarter ended May 31, 2000 due to the net loss incurred for the first six
months of the fiscal year.

Net income (loss). The net loss for the second fiscal quarter ended May 31, 2000
was ($2.116) million, or ($0.18) per share, compared to a net income of $1.26
million, or $0.11 per share, for the same period a year ago.

Comparison of First Six Months of 2000 to First Six Months of 1999

Net sales. Net sales for six months ended May 31, 2000 were $38.5 million an
increase of $8.3, or 27.8%, from the same period a year ago. Net sales from
products for the second fiscal quarter ended May 31, 2000 were $33.9 million,
an increase of $8.1 million or 31.2%, from the same period a year ago. The
increase in net sales from products is due primarily to Internet tool sales
from the Company's wholly owned subsidiaries Terran, Wired and Digital
Origin. Internet tools sales for the six months ended May 31, 2000 increased
to $17.1 million from $5.5 million in the same period a year ago. The Company
acquired Terran in June 1999, acquired Wired in December 1999 and merged with
Digital Origin in May 2000. The increase in Internet tool sales was offset by
a decrease of $3.6 million in digital video sales to $16.8 million in the six
months ended May 31, 2000 from $20.4 million in the same period a year ago.
Net sales from services for the six months ended May 31, 2000 were $4.6
million, an increase of $.3

                                       18
<PAGE>

million or 6.9%, from the same period a year ago. The increase in net sales from
services is due to new customers purchasing and existing customers renewing
their support contracts, and initial sales from the Company's recently announced
streaming media services division, StreamRiver Networks.

Gross profit. The Company's gross profit increased 22.8% to $22.6 million for
the six months ended May 31, 2000 from $18.4 million for the same period a
year ago. Overall gross profit as a percentage of net sales was 58.7% for the
six months ended May 31, 2000 compared to 61.1% for the same period a year
ago, due to the mix of products sold during the period. Specifically, gross
profit as a percentage of net product sales decreased to 51.9% for the six
months ended May 31, 2000 from 56.0% for the same period a year ago, while
gross profit as a percentage of net sales of services increased to 86.2% for
the six months ended May 31, 2000 from 84.6% in the same period a year ago.

Research and development. Research and development expenses decreased 9.7% to
$7.6 million for the six months ended May 31, 2000 from $8.4 million in the same
period a year ago. Research and development expenses consist primarily of
salaries and related benefits, consultants, outside services, occupancy and
depreciation. The Company currently anticipates research and development
expenses will increase in absolute dollars in fiscal 2000 versus fiscal 1999 due
to the acquisitions of Terran and Wired and the merger with Digital Origin and
the planned development of their products.

Selling and marketing. Selling and marketing expenses increased 15.8% to $10.6
million for the six months ended May 31, 2000 from $9.2 million in the same
period a year ago. Selling expenses consist primarily of salaries and related
benefits, commissions, travel, occupancy and depreciation. Marketing expenses
consist primarily of salaries and related benefits, trade shows, seminars,
advertising, website development and lead generation activities. The increase in
selling and marketing expenses resulted primarily from the acquisition of Terran
and Wired and the merger with Digital Origin and the Company's promotion of the
streaming media tools acquired as part of these transactions. The Company
currently anticipates that its selling and marketing expenses will increase in
absolute dollars in fiscal 2000 versus fiscal 1999 as the Company increases its
focus on the Internet and the related support of the Company's promotion of its
streaming media tools.

General and administrative. General and administrative expenses increased 48.0%
to $5.0 million for the six months ended May 31, 2000 from $3.4 million in the
same period a year ago. General and administrative expenses include the cost of
human resources, finance, information technology, legal and other administrative
functions of the Company. The increase in general and administrative expenses
resulted primarily from increased personnel costs as a result of the
acquisitions of Terran and Wired, and legal expenses related to a lawsuit
involving Digital Origin. The Company currently anticipates that its general and
administrative expenses will increase in absolute dollars in fiscal 2000
compared to fiscal 1999 in support of higher anticipated net sales.

Amortization of intangible assets. The Company recorded an expense for the
amortization of intangible assets of $836,000 for the six months ended May 31,
2000 as a result of the acquisitions of Terran, Wired and 21st Century Media.
There was no similar expense recorded for the same period a year ago.

Acquired in-process research and development. In connection with the acquisition
of Wired, the Company expensed $470,000 of the purchase price to in-process
research and development projects for the six months ended May 31, 2000. These
allocations represented the estimated fair value based on risk-adjusted cash
flows related to the incomplete research and development projects. At the date
of acquisition, the development of these projects had not yet reached
technological feasibility and the research and development in progress had no
alternative future uses. Accordingly, these costs were expensed as of the
acquisition date. There was no similar expense recorded in the same period a
year ago.

Merger related costs. In connection with the merger with Digital Origin, the
Company incurred direct, acquisition-related charges of approximately $2.0
million, consisting primarily of investment bank fees, legal and accounting
fees. There was no similar expense recorded in the same period a year ago.

Interest income. Interest income for the six months ended May 31, 2000 was
$591,000, a decrease of $85,000, or 12.6%, from the comparable quarter a year
ago. The decrease in interest income is due to lower cash and cash
equivalents and marketable securities in the first six months of fiscal 2000,
compared to the same period a year ago. The Company currently anticipates
interest income will decline in fiscal 2000 versus 1999 due to additional
reductions of cash resulting from the acquisition of Wired and 21st Century
Media and an additional cash payment due to the shareholders of Terran.

Other income (expenses), net. Other income (expense), net was ($171,000) for
the first six months of fiscal 2000 compared to $5.3 million in the same period
a year ago. The expense of $171,000 relates primarily to foreign exchange losses
on inter-company transactions with the Company's foreign subsidiaries. The
income of $5.3 million relates primarily to licensing





                                       19
<PAGE>

technology from Digital Origin's monitor and color publishing business and a
gain on the sale of Digital Origin's Color Server Group.

Tax provision. The Company has provided for a tax provision in the amount of
$30,000 for the six months ended May 31, 2000, compared to no tax provision in
1999. The tax provision is based on the statutory rate, offset by the expected
utilization of net operating loss carryforwards and tax credits available to the
Company.

Net income (loss). The net loss for the six months ended May 31, 2000 was
($3.535) million, or ($0.30) per share, compared to a net income of $3.363
million, or $0.29 per share, for the same period a year ago.

Liquidity and Capital Resources

The Company has funded its operations to date primarily from public offerings of
equity securities and cash flows from operations. As of May 31, 2000, the
Company's principal sources of liquidity included cash and cash equivalents and
marketable securities totaling approximately $25,650,000.

For the six months ended May 31, 2000, cash used in operating activities was
approximately $4,177,000 compared to cash used in operations of approximately
$6,979,000 for the same period a year ago. Cash used in operations during the
first six months of fiscal 2000 was due to increases in accounts receivable of
$1,401,000, inventories of $2,615,000, prepaid expenses of $358,000 offset by
increases in accounts payable of $399,000, accrued expenses of $175,000, and
deferred revenue of $31,000. Net cash used in investing activities was
approximately $2,645,000 during the first six months of fiscal 2000, compared to
cash provided by investing activities of approximately $9,176,000 for the same
period a year ago. Cash used in investing activities during the six months ended
May 31, 2000 was related to the acquisitions of Wired and 21st Century in the
amounts of $1,487,000 and $481,000, respectively, purchases of property and
equipment of $1,085,000, intangible assets of $174,000 and purchases of other
assets of $1,162,000. In addition, the Company purchased marketable securities
of $14,310,000, which was offset by the proceeds from the sale of marketable
securities of $16,027,000. Cash provided by financing activities during the
first six months of fiscal 2000 was approximately $3,770,000 compared to cash
used in financing activities of $1,287,000 for the same period a year ago. Cash
provided by financing activities in the first six months of fiscal 2000 came
from proceeds from the issuance of common stock pursuant to stock plans.

In connection with prior business combinations, the Company may be required to
make additional payments if certain earn-out provisions are met over the next
several years.

The Company believes its existing cash balance, cash equivalents and marketable
securities will be sufficient to meet the Company's cash requirements for at
least the next twelve months.

CERTAIN FACTORS THAT MAY AFFECT FUTURE RESULTS

Except for the historical information contained herein, the matters discussed in
this Form 10-Q are forward-looking statements, and are based on current
expectations, and involve known and unknown risks, uncertainties and other
factors which may cause the actual results, performance or achievements of the
Company, or industry results, to be materially different from those expressed in
such forward-looking statements. The risks and uncertainties associated with
such statements include the following:

ACQUISITION RELATED RISKS. During the fiscal year ended November 30, 1999, the
Company completed the Terran acquisition. During the first fiscal quarter of
2000, the Company completed the acquisition of Wired. During the second fiscal
quarter of 2000, the Company completed the 21st Century Media acquisition and
the merger with Digital Origin. In addition, the Company acquired J2 Digital
Media early in June 2000. The Company's business and results of operations could
be materially adversely affected in the event the Company fails to complete
publicly announced acquisitions or to successfully integrate the business and
operations of these acquisitions. The Company may continue in the future to
acquire existing businesses, products, and technologies to enhance and expand
its line of products. Such acquisitions may be material in size and in scope.
There can be no assurance that the Company will be able to identify, acquire, or
profitably manage additional business or successfully integrate any acquired
businesses into the Company without substantial expenses, delays, or other
operational or financial problems. Acquisitions involve a number of special
risks and factors, including increasing competition for attractive acquisition
candidates in the Company's markets, the technological enhancement and
incorporation of acquired products into existing product lines and services, the
assimilation of the operations and personnel of the acquired companies, failure
to retain key acquired personnel, adverse short-term effects on reported
operating results, the amortization of acquired intangible assets, the
assumption of undisclosed liabilities of any acquired companies, the failure to
achieve anticipated benefits such as cost savings and synergies,



                                       20
<PAGE>

as well as the diversion of management's attention during the acquisition and
integration process. Some or all of these special risks and factors may have a
material adverse impact on the Company's business, operating results, and
financial condition.

SIGNIFICANT FLUCTUATIONS AND UNPREDICTABILITY OF OPERATING RESULTS. The
Company's quarterly operating results may vary significantly for a number of
reasons, including new product announcements and introductions by the Company or
its competitors, changes in pricing, and the volume and timing of orders
received during the quarter. The Company has also in the past experienced delays
in the development of new products and enhancements, and such delays may occur
in the future. These factors make the forecasting of revenue inherently
uncertain. Additionally, a significant portion of the Company's operating
expenses is relatively fixed, and operating expense levels are based primarily
on internal expectations of future revenue. As a consequence, quarterly
operating expense levels cannot be reduced rapidly in the event that quarterly
revenue levels fail to meet internal expectations. Therefore, if quarterly
revenue levels fail to meet internal expectations, the Company's operating
results would be adversely affected.

EMERGING MARKETS. The Company is targeting the emerging market of new
Internet-based broadcasters that are building streaming media web sites and
businesses and institutions that are adding Internet video to their web sites.
This market and the products utilized by these users are relatively new. The
Company's success in this emerging market will depend on the rate at which the
market develops and the Company's ability to penetrate that market. In addition,
in fiscal 2000, the Company plans to begin targeting consumers who are looking
to edit video at low cost and without complication. The Company believes this
market will grow rapidly in the future as consumers increase their purchases of
DV camcorders that connect directly to personal computers. Using a DV camcorder,
a home PC and the Internet, the Company believes consumers will be able to
capture, edit and stream video simply and easily. The Company's future growth
will depend, in part, on the rate at which consumers purchase DV camcorders and
adopt editing and streaming technology. There can be no assurance that the use
of digital video editing and streaming products, like the ones offered by the
Company, will expand among existing users of video production processes or the
market for new users. Any failure of the Company's products to achieve market
acceptance in these markets, as a result of competition, technological change or
other factors, could have a material adverse effect on the Company's business
and operating results.

RISKS ASSOCIATED WITH DEVELOPMENT AND INTRODUCTION OF NEW PRODUCTS. New product
announcements by the Company's competitors and by the Company itself could have
the effect of reducing customer demand for the Company's existing products. The
introduction of new or enhanced products by the Company also requires the
Company to manage the transitions from existing products. New product
introductions require the Company to devote time and resources to the training
of its sales channel in the features and target customers for such new products,
which efforts could result in less selling efforts being made by the sales
channel during such training period. New product announcements or introductions
could contribute to significant quarterly fluctuations in operating results as
orders for new products commence and orders for existing products decline.

RAPID TECHNOLOGICAL CHANGE. Rapidly changing technology, evolving industry
standards and frequent new product introductions characterize the market for the
Company's products. The Company's future success will depend in part upon its
ability to enhance its existing products and to introduce new products and
features in a timely manner to address customer requirements, respond to
competitive offerings, adapt to new emerging industry standards and take
advantage of new enabling technologies that could render the Company's existing
products obsolete. The Company plan in fiscal 2000 is to continue its investment
in research and development, in connection with the Company's development
strategy. Any delay or failure of the Company in developing additional new
products or features for existing products or any failure of such new products
or features to achieve market acceptance, could have a material adverse effect
on the Company's business and operating results.

COMPETITION. The market for the Company's products is highly competitive and
characterized by pressure to reduce prices, incorporate new features and
accelerate the release of new products. A number of companies currently offer
products that compete directly or indirectly with the Company's products,
including Accom, Inc., Adobe Systems, Apple Computer Inc. ("Apple"), Avid
Technology, Inc., Discreet (a division of Autodesk, Inc.), FAST Electronic GmbH,
Matrox Electronic Systems Ltd., Pinnacle Systems, Inc., Real Networks Inc.,
Loudeye Technologies, Inc., and Sonic Foundry, Inc. In addition, the Company
expects much larger vendors, such as Matsushita Electric Industrial Company
Ltd., Microsoft Corporation, and Sony Corporation, to develop and introduce
digital editing systems that may compete with the Company's products. Many of
these current and potential competitors have greater financial, technical and
marketing resources than the Company. As a result, such competitors may be able
to develop products comparable to or superior to the Company's products, adapt
more quickly than the Company to new technologies, evolving industry standards
or customer requirements, or lower their product costs and thus be able to lower
prices to levels at which the Company could not operate profitably, the
occurrence of any of which could have a material adverse effect on the Company's
business and operating results. In this regard, the Company believes that it
will continue to experience competitive pressure to reduce prices, particularly
for its high data rate systems. The Company has historically realized higher
gross profit on the sale of its high data rate systems than its entry-level
systems, and such continued



                                       21
<PAGE>

competitive pricing pressure could result in lower sales and gross margin, which
in turn could adversely affect the Company's operating results.

DEPENDENCE ON AND COMPETITION WITH APPLE COMPUTER, INC. As a competitor, Apple
could, in the future, inhibit the Company's ability to develop its products that
operate on the Macintosh platform. Additionally, new products and enhancements
to existing products from Apple such as Final Cut Pro could cause customers to
delay purchases of the Company's products or alter their purchase decision
altogether. Furthermore, as the sole supplier of Macintosh computers, any
disruption in the availability of these computers could cause customers to defer
or alter their purchase of the Company's products. The Company relies on access
to key information from Apple to continue development of its products and any
failure to continue supplying the Company's engineers with this information
could have a material adverse affect on the Company's business and financial
results.

DEPENDENCE ON MICROSOFT CORPORATION. Many of the Company's products operate in
the Windows environment and the Company's engineers depend upon access to
information in advance from Microsoft Corporation ("Microsoft"). Any failure to
continue supplying the Company's engineers with this information could have a
material adverse affect on the Company's business and financial results.

DEPENDENCE ON SINGLE OR LIMITED SOURCE SUPPLIERS. The Company is dependent on
single or limited source suppliers for several key components used in its
products. The availability of many of these components is dependent on the
Company's ability to provide suppliers with accurate forecasts of its future
requirements, and certain components used by the Company have been subject to
industry-wide shortages. The Company does not carry significant inventories of
these components and has no guaranteed supply arrangements with such suppliers.
There can be no assurance that the Company's inventories would be adequate to
meet the Company's production needs during any interruption of supply. The
Company's inability to develop alternative supply sources, if required, or a
reduction or stoppage in supply, could delay product shipments until new sources
of supply become available, and any such delay could adversely affect the
Company's business and operating results in any given period.

DEPENDENCE ON PROPRIETY TECHNOLOGY. The Company's ability to compete
successfully and achieve future revenue growth will depend, in part, on its
ability to protect its proprietary technology and operate without infringing the
rights of others. The Company has in the past received, and may in the future
continue to receive, communications suggesting that its products may infringe
patents or other intellectual property rights of third parties. The Company's
policy is to investigate the factual basis of such communications and negotiate
licenses where appropriate. While it may be necessary or desirable in the future
to obtain licenses relating to one or more products, or relating to current or
future technologies, there can be no assurance that the Company will be able to
do so on commercially reasonable terms or at all. There can be no assurance that
these or other future communications can be settled on commercially reasonable
terms or that they will not result in protracted and costly litigation.

RISKS OF THIRD-PARTY CLAIMS OF INFRINGEMENT. There has been substantial industry
litigation regarding patent, trademark and other intellectual property rights
involving technology companies. In the future, litigation may be necessary to
enforce any patents issued to the Company or to enforce trade secrets,
trademarks and other intellectual property rights owned by the Company, to
defend the Company against claimed infringement of the rights of others and to
determine the scope and validity of the proprietary rights of others. For a
description of certain pending litigation instituted against the Company, see
Note 10 to the Consolidated Financial Statements included herein. Any such
litigation could be costly and a diversion of management's attention, which
could adversely affect the Company's business, operating results and financial
condition. Adverse determinations in any such litigation could result in the
loss of the Company's proprietary rights, subject the Company to significant
liabilities, require the Company to seek licenses from third parties or prevent
the Company from manufacturing or selling its products, any of which could
adversely affect the Company's business, operating results and financial
condition.

DEPENDENCE ON RESELLERS AND DISTRIBUTORS. The Company relies primarily on its
worldwide network of independent VARs to distribute and sell its content
creation products to end-users. The Company's resellers generally offer products
of several different companies, including in some cases products that are
competitive with the Company's products. In addition, many of these VARs are
small organizations with limited capital resources. There can be no assurance
that the Company's resellers will continue to purchase the Company's products or
provide them with adequate levels of support, or that the Company's efforts to
expand its VAR network will be successful, any significant failure of which
could have a material adverse effect on the Company's business and operating
results. Digital Origin relies on distributors to distribute its products. There
can be no assurance that Digital Origin's distributors will continue to purchase
the Company's products, any significant failure of which could have a material
adverse effect on the Company's business and operating results.

RELIANCE ON INTERNATIONAL SALES. International sales and operations may be
subject to risks such as the imposition of government controls, export license
requirements, restrictions on the export of critical technology, less effective
enforcement of proprietary



                                       22
<PAGE>

rights; currency exchange fluctuations, generally longer collection periods,
political instability, trade restrictions, changes in tariffs, difficulties in
staffing and managing international operations, potential insolvency of
international resellers and difficulty in collecting accounts receivable. The
Company's international sales are also subject to more seasonal fluctuation than
domestic sales. In this regard, the traditional summer vacation period, which
occurs during the Company's third fiscal quarter, may result in a decrease in
sales, particularly in Europe. There can be no assurance that these factors will
not have an adverse effect on the Company's future international operations and
consequently, on the Company's business and operating results.

INTERNET-BASED SALES. In fiscal 1999, the Company implemented e-commerce systems
allowing customers to purchase the Company's products directly from its web
site. Although the portion of revenue derived from its e-commerce web site was
less than five percent in fiscal 1999, the Company anticipates revenue derived
from its e-commerce web site to ramp up in fiscal 2000. There can be no
assurances that the Company's customers will continue to purchase the Company's
products from its web site or that the web site will not experience technical
difficulties thereby causing customers to delay purchases. Any significant
technical difficulties could have a material adverse effect on the Company's
business and operating results.

DEPENDENCE ON KEY PERSONNEL. Competition for employees with the skills required
by the Company is intense in the geographic areas in which the Company's
operations are located. The Company believes that its future success will depend
on its continued ability to attract and retain qualified employees, especially
in research and development.

EURO CONVERSION. On January 1, 1999, 11 of the 15 member countries of the
European Union established fixed conversion rates between their existing
sovereign currencies and the Euro. As of January 1, 2002, the transition to the
Euro will be complete. The Company has operations within the European Union and
has prepared for the Euro conversion. The Company does not expect the costs
associated with the transition to be material. However, the overall effect of
the transition to the Euro may have a material adverse affect on the Company's
business, financial condition and financial results.

Item 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Derivative Financial Instruments, Other Financial Instruments and Derivative
Commodity Instruments. The Company does not participate in derivative financial
instruments, other financial instruments for which the fair value disclosure
would be required under Statement of Financial Accounting Standards No. 107
DERIVATIVE FINANCIAL INSTRUMENTS, OTHER FINANCIAL INSTRUMENTS AND DERIVATIVE
COMMODITY INSTRUMENTS ( SFAS No. 107). All of the Company's investments are in
short-term, investment grade commercial paper, certificates of deposit and U.S.
Government and agency securities that are carried at fair value on the Company's
books. Accordingly, the Company has no quantitative information concerning the
market risk of participating in such investments.

Primary Market Risk Exposures. The Company's primary market risk exposures are
in the area of interest rate risk and foreign currency exchange rate risk. The
Company's investment portfolio of cash equivalents is subject to interest rate
fluctuations, but the Company believes this risk is immaterial due to the
short-term nature of these investments. The Company's business in Europe is
conducted in local currency. In Asia, business is conducted in US currency. In
addition, the Company sells products to its foreign subsidiaries in transactions
denoted in US currency. The Company's foreign subsidiaries are therefore exposed
to foreign exchange fluctuations on US currency-denominated inter-company
payables to the Company. The Company has no foreign exchange contracts, option
contracts or other foreign hedging arrangements.


                                       23
<PAGE>

                           PART II. OTHER INFORMATION


Item 1. Legal Proceedings

On June 7, 1995, a lawsuit was filed against the Company by Avid Technology,
Inc. ("Avid") in the United States District Court for the District of
Massachusetts. The complaint generally alleges patent infringement by the
Company arising from the manufacture, sale, and use of the Company's Media 100
products. The complaint includes requests for injunctive relief, treble damages,
interest, costs and fees. In July 1995, the Company filed an answer and
counterclaim denying any infringement and asserting that the Avid patent in
question is invalid. The Company intends to vigorously defend the lawsuit. In
addition, Avid is seeking reissue of the patent, including claims that it
asserts are broader than in the existing patent, and these reissue proceedings
remain pending before the U.S. Patent and Trademark Office. On January 16, 1998,
the court dismissed the lawsuit without prejudice to either party moving to
restore it to the docket upon completion of all matters pending before the U.S.
Patent and Trademark Office. There can be no assurance that the Company will
prevail in the lawsuit asserted by Avid or that the expense or other effects of
the lawsuit, whether or not the Company prevails, will not have a material
adverse effect on the Company's business, operating results and financial
condition.

On January 13, 1999 and January 28, 1999, the Company and one of its former
directors, Charles Berger, were named as defendants in two shareholder class
action lawsuits against Splash Technology Holdings, Inc. ("Splash"), various
directors and executives of Splash and certain selling shareholders of Splash.
The lawsuit alleges, among other things, that the defendants made or were
responsible for material misstatements, and failed to disclose information
concerning Splash's business, finances and future business prospects in order to
artificially inflate the price of Splash common stock. The complaint does not
identify any statements alleged to have been made by Charles Berger or the
Company. The complaint further alleges that the Company engaged in a scheme to
artificially inflate the price of Splash common stock to reap an artificially
large return on the sale of the common stock in order to pay off its debt. The
Company and the former director vigorously deny all allegations of wrongdoing
and intend to aggressively defend themselves in these matters. Defendant's
initial motion to dismiss the action was granted with leave to amend, and
plaintiffs have amended the complaint. Defendants have filed their second motion
to dismiss.

On July 18, 1997, Intelligent Electronics, Inc. and its alleging a breach of
contract and related claims in the approximate amount of $800,000, maintaining
that the Company failed to comply with various return, price protection,
inventory balancing and marketing development funding undertakings. In 1997, the
Company filed an answer to the complaint and cross-claimed against the
plaintiffs and in October 1997 additionally cross claimed against Deutsche
Financial, Inc., a factor in the account relationship between the Company and
the plaintiffs, seeking the recovery of approximately $2 million. During May
2000, the trial was completed and the Court entered two judgments in favor of
the Company, one in the amount of $313,795.70 plus interest against Intelligent
Electronics and one in the amount of $1,490,623 plus interest against Deutsche
Financial, Inc. Each party has requested that the Court reconsiders various
portions of its rulings, and an appeal of the final judgment is expected.

Item 2.  Changes in Securities and Use of Proceeds

(c) Issuance of Securities

On May 9, 2000, the Company completed its merger with Digital Origin, Inc. Media
100 registered 3,725,483 shares of Media 100 common stock. The Company issued
the shares in a private placement transaction pursuant to Section 4 (2) under
the Securities Act of 1933. The merger was accounted for as a pooling of
interests. The Company has filed a Form S-4 Registration Statement to cover the
resale of the securities issued in the merger.

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

The Company held an annual meeting of stockholders on May 5, 2000, at which the
stockholders approved the following proposals by the number of shares of Common
Stock voted below:

PROPOSAL

<TABLE>
<CAPTION>

                                                                                  Number of Shares
                                                                                  ----------------
                                                               Voted for     Voted Against      Abstained    Broker non-vote
                                                               ---------     -------------      ---------    ---------------
<S>                                                            <C>                <C>             <C>            <C>
     (1)
     Approval of issuance of shares of Media 100
     Common stock in the proposed merger                       5,434,080          15,870          11,757         2,386,384

</TABLE>



                                       24
<PAGE>


     (2)  Election of Directors

<TABLE>
<CAPTION>

                                                                                 Number of Shares
                                                                                 ----------------
                                                                              Voted for        Against
                                                                              ---------        -------
<S>                                                                           <C>              <C>
     John A. Molinari                                                         7,433,002        415,089
     Mark Housley                                                             7,433,094        414,997
     Maurice L. Castonguay                                                    7,433,044        415,047
     Carl Rosendahl                                                           7,433,094        414,997
     Paul J. Severino                                                         7,433,094        414,997

<CAPTION>

                                                                                    Number of Shares
                                                                                    ----------------
                                                                Voted for     Voted Against      Abstained
                                                                ---------     -------------      ---------
<S>       <C>                                                   <C>             <C>                <C>
     (3)
     Amend the certificate of incorporation to
       Increase the number of authorized shares of
       Media 100 common stock by 75,000,000 shares
       To 100,000,000 shares                                    6,547,545       1,287,704          12,842

<CAPTION>

                                                                                     Number of Shares
                                                                                     ----------------
                                                                Voted for     Voted Against      Abstained     Broker Non-vote
                                                                ---------     -------------      ---------    ----------------
<S>                                                             <C>             <C>                <C>            <C>
     (4)
     Increase by 2,000,000 the number of shares
       Of Media 100 common shares available for Shares
       of the Company's common stock, $.01
       Issuance under the Key Employee Incentive
       Plan (1992) to 4,200,000                                 3,931094        1,518,789          11,824         2,386,384

<CAPTION>

                                                                                     Number of Shares
                                                                                     ----------------
                                                                Voted for     Voted Against      Abstained
                                                                ---------     -------------      ---------
<S>                                                             <C>                 <C>             <C>
     (5)
     Approval of Arthur Andersen LLP as
       Media 100's independent auditors for the
       Fiscal year ending November 30, 2000                     7,843,430           2,236           2,425

</TABLE>


Item 6. Exhibits and Reports on Form 8-K

a)  Exhibits

Exhibits required as part of this Quarterly Report on Form 10-Q are listed in
the exhibit index on page 27.

b)  Reports on Form 8-K

The following report on 8-K was filed during the second quarter of fiscal year
2000:

          Form 8-K, dated May 8, 2000, was filed with the Commission on May 23,
2000, consisting of the following: Item 2. Acquisition or Disposition of Assets
and Item 7. Financial Statement, Pro Forma Financial Information and Exhibits to
detail the acquisition of Digital Origin, Inc.


                                       25
<PAGE>

                                   SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.


                               Media 100 Inc.




Date:    July 17, 2000         By:  /s/ Steven D. Shea
                                    ------------------
                                    Steven D. Shea
                                    Chief Financial Officer
                                      Treasurer





                                       26
<PAGE>

                                  EXHIBIT INDEX

<TABLE>
<CAPTION>

      Number                              Description
      ------                              -----------
<S>                 <C>
      2.07          Merger Agreement (the "Merger Agreement") dated as of
                         December 21, 1995 among Radius Inc., Splash Technology,
                         Inc., Summit Subordinated Debt Fund, L.P., Summit
                         Ventures IV, L.P., Summit Investors II, L.P., Splash
                         Technology Holdings, Inc. and Splash Merger Company,
                         Inc. (2)

      2.08          Amendment No. 1 to Merger Agreement dated as of
                    January 30, 1996. (2)

      2.09          Agreement and Plan of Reorganization dated December 28, 1999
                    with Media 100, Inc.

      4.03          A       Warrant dated September 13, 1995 between IBM Credit
                    Corporation and the Digital Origin Inc.. (8)

                    B       Warrant dated October 13, 1996, between Mitsubishi
                    Electronics America, Inc. and the Digital Origin Inc.. (9)

      4.04                  Form of Registration Rights Agreement between the
                    Digital Origin Inc. and certain shareholders. (8)

      10.14         A       *Digital Origin Inc.'s 401(k) Savings and Investment
                    Plan. (6)

                    B       *Amendment to Digital Origin Inc.'s 401(k) Savings
                    and Investment Plan. (1)

                    C       *Digital Origin Inc.'s 401(k) Savings and Investment
                    Plan Loan Policy. (1)

      10.15         *Digital Origin Inc.'s 1995 Stock Option Plan. (1)

      10.16         *Form of Stock Option Agreement and Exercise Request as
                    currently in effect under 1995 Stock Option Plan. (1)

      10.17         *Digital Origin Inc.'s 1994 Directors' Stock Option Plan.
                    (1)

      10.18         Form of Indemnity Agreement with Directors. (5)

      10.19         *Employment Agreement by and between Digital Origin Inc. and
                    Mark Housley dated December 20, 1996. (10)

      10.20         Asset Purchase Agreement dated as of August 7, 1998 between
                    Korea Data Systems America, Inc. and the Digital Origin
                    Inc.. (11)

      10.21         Amended and Restated License Agreement dated as of August 7,
                    1998 between Korea Data Systems America, Inc. and the
                    Digital Origin Inc.. (11)

      10.22         Asset Purchase Agreement dated as of November 23, 1998
                    between Post Digital Software, Inc. and the Digital Origin
                    Inc.. (12)

      10.23         Asset Sale Agreement dated as of December 4, 1998 between
                    Splash Technology Holdings, Inc. and the Digital Origin
                    Inc.. (12)

      10.24         Supplement to the License and Asset Purchase Agreement dated
                    December 4, 1998 between Korea Data Systems America, Inc.
                    and the Digital Origin Inc.. (12)

</TABLE>


                                       27
<PAGE>


     10.25         Lease agreement by and between Digital Origin Inc. and
                   Eliane Ortuno, Trustee, Donald T. Kitts Trust dated January
                   8, 1999. (460 East Middlefield Road, Mountain View,
                   California offices). (13)

     10.26         Digital Origin Inc.'s 1999 Employee Stock Purchase Plan and
                   related documents. (14)

     27            Financial Data Schedule


     (1)  Incorporated by reference to exhibits to Digital Origin Inc. Report on
              Form 10-K filed on December 15, 1995.

     (2)  Incorporated by reference to exhibits to Digital Origin Inc. Report on
              Form 10-Q filed on February 13, 1996

     (5)  Incorporated by reference to exhibits to Digital Origin Inc.
              Registration Statement on Form S-1 (File No. 33-35769) which
              became effective on August 16, 1990.

     (6)  Incorporated by reference to exhibits to Digital Origin Inc. Report on
              Form 10-K filed on December 28, 1992.

     (8)  Incorporated by reference to Digital Origin Inc. Registration
              Statement on Form S-1 (File No. 333-12417) filed on September 20,
              1996.

     (9)  Incorporated by reference to Amendment No. 1 to Digital Origin Inc.
              Registration Statement on Form S-1 (File No. 333-12417) filed
              on November 12, 1996.

     (10) Incorporated by reference to exhibits to Digital Origin Inc. Report on
              Form 10-Q filed on February 11, 1997.

     (11) Incorporated by reference to exhibits to Digital Origin Inc. Report on
              Form 10-Q filed on August 11, 1998.

     (12) Incorporated by reference to exhibits to Digital Origin Inc. Report on
              Form 10-K filed on December 23, 1998.

     (13) Incorporated by reference to exhibits to Digital Origin Inc. Report on
              Form 10-Q filed on February 10, 1999.

     (14) Incorporated by reference to exhibits to Digital Origin Inc. Report on
              Form 10-Q filed on May 12, 1999.

     *  management contracts or compensatory plans required to be filed as an
              exhibit to Form 10-K.




                                        28