<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:    FEBRUARY 28, 2001
                                                -----------------

         [ ] 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                12,368,236 SHARES
--------------------------------------         -------------------------------
             Class                              Outstanding at March 31, 2001



<PAGE>


                                                    MEDIA 100 INC.



                               INDEX TO FORM 10-Q

                                                                         PAGE
                                                                        NUMBER
PART I - FINANCIAL INFORMATION                                          ------
 ITEM 1  Consolidated Financial Statements:
         Consolidated Balance Sheets as of
          February 28, 2001 and November 30, 2000                           3

         Consolidated Statements of Operations for the three
          months ended February 28, 2001 and  February 29, 2000             4

         Consolidated Statements of Cash Flows for the three
          months ended February 28, 2001 and February 29, 2000              5

         Notes to Consolidated Financial Statements                       6 - 13

 ITEM 2  Management's Discussion and Analysis of Financial
          Condition and Results of Operations                            14 - 20

 ITEM 3  Quantitative and Qualitative Disclosures About Market Risk        21

PART II - OTHER INFORMATION
 ITEM 1   Legal Proceedings                                                22

 ITEM 6   Exhibits and Reports on Form 8-K                                 23

SIGNATURES                                                                 24

EXHIBIT INDEX                                                              25

                                       2

<PAGE>

                         PART I - FINANCIAL INFORMATION

                                 MEDIA 100 INC.
                           CONSOLIDATED BALANCE SHEETS
                                 (in thousands)

<TABLE>
<CAPTION>
                                                 (unaudited)
                                                 February 28,       November 30,
                                                         2001               2000
                                                 ------------       ------------
<S>                                              <C>                <C>
ASSETS
Current assets:
    Cash and cash equivalents                      $  11,609         $  11,987
    Marketable securities                                593             5,674
    Accounts receivable, net of allowance
      for doubtful accounts of $3,172 in 2001
      and $3,812 in 2000                               7,404             8,619
    Inventories                                        4,226             4,314
    Prepaid expenses and other current assets          1,258             1,180
                                                   ---------         ---------
      Total current assets                            25,090            31,774

Property and equipment, net                            5,946             6,056
Intangible assets, net                                 6,314             8,316
Other assets, net                                      1,118             1,245
                                                   ---------         ---------

      Total assets                                 $  38,468         $  47,391
                                                   =========         =========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
    Accounts payable                               $   2,015         $   4,561
    Accrued expenses                                   7,397             8,231
    Note payable                                           -             1,492
    Deferred revenue                                   4,960             5,272
                                                   ---------         ---------
    Total current liabilities                         14,372            19,556

Contingencies (Note 9)                                     -                 -

Stockholders' equity:
    Preferred stock                                        -                 -
    Common stock                                         126               123
    Capital in excess of par value                   217,402           217,182
    Accumulated deficit                             (193,376)         (189,380)
    Accumulated other comprehensive loss                 (56)              (90)
                                                   ---------         ---------
       Total stockholders' equity                     24,096            27,835
                                                   ---------         ---------
       Total liabilities and stockholders'
         equity                                    $  38,468         $  47,391
                                                   =========         =========
</TABLE>


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


                                       3
<PAGE>

                                 MEDIA 100 INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                      (in thousands, except per share data)
                                   (unaudited)
<TABLE>
<CAPTION>
                                                       Three Months Ended
                                                 February 28,       February 29,
                                                         2001               2000
                                                 ------------       ------------
<S>                                              <C>                <C>
Net sales:
 Products                                         $  11,317          $  15,655
 Services                                             2,532              2,265
                                                  ---------          ---------
Total net sales                                      13,849             17,920

Cost of sales                                         5,596              7,536
                                                  ---------          ---------

  Gross profit                                        8,253             10,384
                                                  ---------          ---------
Operating expenses:
  Research and development                            3,882              3,648
  Selling and marketing                               4,872              5,127
  General and administrative                          1,909              2,552
  Amortization and write-down of
    intangible assets                                 2,006                273
  Acquired in-process research and
    development                                           -                470
                                                  ---------          ---------
    Total operating expense                          12,669             12,070
                                                  ---------          ---------

  Operating loss                                     (4,416)            (1,686)

Interest income, net                                    106                316
Other income (expense), net                             314                (19)
                                                  ---------          ---------

  Loss before tax provision                          (3,996)            (1,389)

Tax provision                                             -                 30
                                                  ---------          ---------
  Net loss                                        $  (3,996)         $  (1,419)
                                                  =========          =========
Basic loss per share                              $   (0.32)         $   (0.12)
                                                  =========          =========
Diluted loss per share                            $   (0.32)         $   (0.12)
                                                  =========          =========
Weighted average common and potential
  common shares outstanding:

Basic                                                12,333             11,700
                                                  =========          =========
Diluted                                              12,333             11,700
                                                  =========          =========
</TABLE>


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


                                       4
<PAGE>

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

<TABLE>
<CAPTION>
                                                       Three Months Ended
                                                 February 28,       February 29,
                                                         2001               2000
                                                 ------------       ------------
<S>                                              <C>                <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss                                        $  (3,996)         $   (1,419)
  Adjustments to reconcile net loss from
   operations to net cash used in
   operating activities:
     Depreciation and amortization                      876                 884
     Non-cash interest expense                            -                  17
     Acquired in-process research
       and development                                                      470
     Amortization and write-down of
       acquisition-related intangible assets          2,006                 275
     Loss on sale of marketable securities               15                   -
  Changes in assets and liabilities, excluding
    effects of acquisition:

     Accounts receivable                              1,215                 (61)
     Inventories                                         88              (1,926)
     Prepaid expenses and other current assets           49                (715)
     Accounts payable                                (2,546)                221
     Accrued expenses                                  (834)             (1,170)
     Deferred revenue                                  (312)                (82)
                                                  ---------          ----------
  Net cash used in operating activities              (3,439)             (3,506)
                                                  ---------          ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
     Acquisition of Wired, Inc., net of
       cash acquired                                      -              (1,487)
     Net purchases of equipment                        (729)               (599)
     Purchase of intangible assets                      (42)               (103)
     Net proceeds from sales of
       marketable securities                          5,067                  83
                                                  ---------          ----------
  Net cash provided by (used in)
    investing activities                              4,296              (2,106)
                                                  ---------          ----------

CASH FLOWS FROM FINANCING ACTIVITIES:
     Payment of note payable                         (1,492)                  -
     Proceeds from issuance of common
       stock pursuant to stock plans                    223               1,695
                                                  ---------          ----------
  Net cash (used in) provided by
    financing activities                             (1,269)              1,695
                                                  ---------          ----------
EFFECT OF EXCHANGE RATE CHANGES ON CASH                  34                   1
NET DECREASE IN CASH OF DIGITAL ORIGIN, INC.
FOR THE TWO MONTHS ENDED NOVEMBER 30, 1999                -              (1,483)
                                                  ---------          ----------
NET DECREASE IN CASH AND CASH EQUIVALENTS              (378)             (5,399)
CASH AND CASH EQUIVALENTS, beginning of period       11,987              13,858
                                                  ---------          ----------
CASH AND CASH EQUIVALENTS, end of period          $  11,609          $    8,459
                                                  =========          ==========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
     Cash paid for income taxes                           7                   2
                                                  =========          ==========
OTHER TRANSACTIONS NOT USING CASH:
     Change in value of marketable securities            46                (103)
                                                  =========          ==========
SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING
  ACTIVITIES :

In connection 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
                                                  =========          ==========
</TABLE>


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


                                       5
<PAGE>
                                 MEDIA 100 INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                (UNAUDITED, EXCEPT FOR NOVEMBER 30, 2000 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, 2000, 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 designs and sells software applications, systems (comprising
software and hardware) and services (for encoding and hosting digital media)
that allow Internet-based ("online") and traditional broadcasters, corporate
marketing professionals and educators to create and deliver high-quality video
programs as either traditional media or Internet-compatible streams ("streaming
media").

2.  Principles of Consolidation

The accompanying consolidated financial statements include the accounts of the
Company and its wholly owned subsidiaries after elimination of significant
intercompany transactions and balances. These consolidated financial statements
reflect the use of the following significant accounting policies, as described
below and elsewhere in the notes to the consolidated financial statements. These
consolidated financial statements are prepared in accordance with accounting
principles generally accepted in the United States.


                                       6
<PAGE>
                                 MEDIA 100 INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                (UNAUDITED, EXCEPT FOR NOVEMBER 30, 2000 AMOUNTS)
                                   (Continued)

3.  Acquisitions

DIGITAL ORIGIN, INC.

On May 9, 2000, the Company completed its merger with Digital Origin, Inc.
(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 has been 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 part of the transaction, the Company
incurred direct, merger-related costs of approximately $2.0 million, consisting
primarily of investment banking fees, legal and accounting fees. All such costs
were 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 period
preceding the merger were as follows (in thousands):

<TABLE>
<CAPTION>
                                                          Digital
                                              Media 100    Origin    Eliminations   Combined
                                              ---------   --------   ------------   --------
Three Months Ended February 29, 2000 (a)
----------------------------------------
<S>                                           <C>         <C>         <C>          <C>
 Net sales                                     $ 14,482    $ 3,576     $ (138)      $17,920
 Net loss                                           108     (1,435)       (92)       (1,419)
</TABLE>

(a) Digital Origin results represent December 1, 1999 through February 29, 2000.


                                       7
<PAGE>

4.  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 include money
market accounts and repurchase agreements with overnight maturities.
Approximately $0.5 million of the cash and cash equivalents were restricted
under various letters of credit at February 28, 2001.

The Company accounts for marketable securities in accordance with Statement of
Financial Accounting Standards (SFAS) No. 115, ACCOUNTING FOR CERTAIN
INVESTMENTS IN DEBT AND EQUITY SECURITIES. 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 included as a component
of stockholders' equity. All of the Company's marketable securities are
classified as available-for-sale.

Marketable securities held as of February 28, 2001 and November 30, 2000 consist
of the following (in thousands):

<TABLE>
<CAPTION>
  Investments available for sale:          Maturity           February 28,     November 30,
                                                                      2001             2000
                                                              ------------     ------------
<S>                                    <C>                    <C>               <C>
  U.S. Treasury Notes                   less than 1 year        $      -          $   509
  U.S. Treasury Notes                   1 - 5 years                    -            2,030
                                                                --------          -------
    Total U.S. Treasury Notes                                          -            2,539

  U.S. Agency Bonds                     less than 1 year               -              507
                                                                --------          -------
    Total U.S. Agency Bonds                                                           507

  Money Market Instruments              less than 1 year             122            1,044
  Corporate Obligations                 less than 1 year              75            1,116
  Corporate Obligations                 1 - 5 years                  518            1,512
                                                                --------          -------
    Total Corporate Obligations                                      593            2,628

  Total investments available for sale                               715            6,718
  Less: cash and cash equivalents                                   (122)          (1,044)
                                                                --------          -------
  Total marketable securities                                   $    593          $ 5,674
                                                                ========          =======
</TABLE>


Marketable securities had a cost of $591 and $5,718, and a market value of $593
and $5,674 at February 28, 2001 and November 30, 2000, respectively. To adjust
the carrying amount of the February 28, 2001 and November 30, 2000 marketable
securities portfolio to market value, unrealized losses have been reflected as a
component of accumulated other comprehensive loss in stockholders' equity
pursuant to the provisions of SFAS No. 115.

5.  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>
                                    February 28,       November 30,
                                            2001               2000
                                    ------------       ------------
    <S>                            <C>                  <C>
     Raw materials                   $   2,321            $ 2,814
     Work-in-process                     1,202                733
     Finished goods                        703                767
                                     ---------            -------
                                     $   4,226            $ 4,314
                                     =========            =======
</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.


                                       8
<PAGE>
                                 MEDIA 100 INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                (UNAUDITED, EXCEPT FOR NOVEMBER 30, 2000 AMOUNTS)
                                   (Continued)

6. 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>
                                                     February 28,   November 30,
                                                             2001           2000
                                                     ------------   ------------
<S>                                                  <C>            <C>
  Machinery and equipment                             $  13,755      $  13,308
  Purchased software                                      6,052          6,062
  Furniture and fixtures                                  1,766          1,733
  Vehicles                                                    9              9
  Leasehold improvements                                  1,685          1,618
                                                      ---------      ---------
                                                      $  23,267      $  22,730
  Less accumulated depreciation and amortization        (17,321)       (16,674)
                                                      ---------      ---------
                                                      $   5,946      $   6,056
                                                      =========      =========
</TABLE>

7. Intangible Assets

Intangible assets consist of the following as of February 28, 2001 and
November 30, 2000 (in thousands):


<TABLE>
<CAPTION>
                                                     February 28,   November 30,
                                                             2001           2000
                                                     ------------   ------------
<S>                                                  <C>            <C>
  Patents and Trademarks                              $    473       $    431
  Acquired Technology                                    3,460          3,460
  Goodwill                                               6,746          7,625
                                                      --------       --------
                                                      $ 10,679       $ 11,516
  Less accumulated amortization                         (4,365)        (3,200)
                                                      --------       --------
                                                      $  6,314       $  8,316
                                                      ========       ========
</TABLE>

Patents and trademarks are being amortized over periods ranging from three to
five years, their estimated useful lives. The Company amortizes goodwill and
developed acquired technology related to its acquisitions using a
straight-line method over periods ranging from 2 to 3 years, their estimated
useful life. The Company recorded an expense for the amortization and
write-down of intangible assets of $2.0 million in the first fiscal quarter
of 2001 compared to $.3 million in the first fiscal quarter of fiscal 2000.
Included in the $2.0 million was a write-down of goodwill of $.9 million
related to the acquisitions of 21st Century LLC and J2 Digital Media, Inc.
These two acquisitions were combined to form Streamriver, which was launched
in June 2000. During the first quarter of fiscal 2001, the goodwill from
these two acquisitions was determined to be impaired due to continued
operating losses in Streamriver and the uncertainty surrounding the Company's
ability to recover the goodwill through future cash flows. The Company is
currently considering the sale or disposition of the Streamriver division.

8.  Net Loss Per Common Share

The Company computes earnings per share pursuant to SFAS No. 128, EARNINGS PER
SHARE. In accordance with SFAS No. 128, basic net income (loss) per share is
computed using the weighted-average number of common shares outstanding. Diluted
income per share is computed 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.


                                       9
<PAGE>

                                 MEDIA 100 INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                (UNAUDITED, EXCEPT FOR NOVEMBER 30, 2000 AMOUNTS)
                                   (Continued)

8.  Net Loss Per Common Share (continued)

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

<TABLE>
<CAPTION>

                                                      Three months ended
                                                 February 28,   February 29,
                                                         2001           2000
                                                 ------------- --------------
<S>                                               <C>            <C>
  Weighted average shares of common
    stock Outstanding                                  12,333         11,700

  Effect of potential common shares - stock
    options and warrants outstanding
    (unless antidilutive)                                   -              -
                                                    ---------     ----------
  Weighted average shares and potential
    common shares outstanding                          12,333         11,700
                                                    =========      =========
</TABLE>


The Company excludes potentially dilutive securities from its diluted net loss
per share computation when either the exercise price of the securities exceeds
the fair value of the Company's common stock or when the Company reports a net
loss and the effect of including such securities would be antidilutive. During
the three months ended February 28, 2001 and February 29, 2000, options to
purchase approximately 2,813,000 and 1,504,000 weighted average shares of common
stock, respectively, were not included in the computation of diluted net loss
per share as a result of their antidilutive effect.

9.  Contingencies

(i) The company provides accruals for all direct costs associated with the
estimated resolution of known contingencies. The accrual is established at the
earliest date at which it is deemed probable that a liability has been incurred
and the amount of such liability can be reasonably estimated.

(ii) 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.

On August 16, 2000, the U.S. Patent and Trademark Office issued an Office Action
rejecting all of the claims made by Avid in their latest request for
reexamination of the patent related to the aforementioned lawsuit. In addition,
the Examiner at the U.S. Patent and Trademark Office designated the action as
"final". On November 29, 2000, Avid filed a Notice of Appeal of the Examiner's
rejections to the U.S. Patent and Trademark Office Board of Patent Appeals and
Interferences. There can be no assurance that the Company will prevail in the
appeal by Avid or that the expense or other effects of the appeal, whether or
not the Company prevails, will not have a material adverse effect on the
Company's business, operating results and financial condition.

(iii) 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 Digital
Origin. The complaint further alleges that Digital Origin 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


                                       10
<PAGE>

                                 MEDIA 100 INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                (UNAUDITED, EXCEPT FOR NOVEMBER 30, 2000 AMOUNTS)
                                   (Continued)

9.  Contingencies (continued)

and intend to aggressively defend themselves in these matters. Defendant's two
initial motions to dismiss the action were granted with leave to amend, and
plaintiffs have again amended the complaint. Defendants have now filed their
third motion to dismiss.

(iv) On July 18, 1997, Intelligent Electronics, Inc. filed a claim against
Digital Origin 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 existing accounts receivable of approximately $1.8 million. During
May 2000, the trial was completed and the Court entered two judgments in favor
of Digital Origin, one in the amount of $314,000 plus interest against
Intelligent Electronics and one in the amount of $1,491,000 plus interest
against Deutsche Financial, Inc. In September 2000, Intelligent Electronics,
Inc. paid $314,000 plus interest of $139,000 and reimbursement of certain costs
in the amount of $20,000 to the Company. Deutsche Financial, Inc. has filed an
appeal, which is expected to be heard during 2001.

(v) On October 12, 1999, a lawsuit was filed against the Company by McRoberts
Software, Inc. in the United States District Court for the Southern District of
Indiana. The complaint alleges copyright infringement, breach of contract, and
trade secret misappropriation. The complaint includes requests for injunctive
relief, treble damages, interest, costs and fees. In November 1999, the Company
filed an answer and counterclaim denying any infringement. The Company intends
to vigorously defend the lawsuit.

 (vi) 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.

10. Capitalized Software Development Costs

The Company capitalizes certain computer software development costs.
Capitalization of costs commences upon establishing technological feasibility.
Capitalized costs, net of accumulated amortization, were approximately $29,000,
as of February 28, 2001 and November 30, 2000, and are included in other assets.
These costs are amortized on a straight-line basis over two years, which
approximates the economic life of the product.

11. Income Taxes

The Company has not provided for a tax provision in the first fiscal quarter
of 2001 due to the net loss incurred during the first three months of the
fiscal year and its expectation for taxable income for the year.

                                       11
<PAGE>
                                 MEDIA 100 INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                (UNAUDITED, EXCEPT FOR NOVEMBER 30, 2000 AMOUNTS)
                                   (Continued)

12.  Accrued Expenses

Accrued expenses at February 28, 2001 and November 30, 2000 consist of the
following (in thousands):

<TABLE>
<CAPTION>

                                                    February 28,   November 30,
                                                            2001           2000
                                                    ------------   ------------
     <S>                                            <C>              <C>
       Payroll, payroll taxes and other taxes        $ 1,425          $ 2,242
       Accrued warranty                                  561              559
       Accrued restructuring                               1              528
       Accrued inventory                                 872              763
       Accrued legal and professional services           864              692
       Accrued selling and marketing                     355              301
       Accrued other                                   3,319            3,146
                                                     -------          -------
                                                     $ 7,397          $ 8,231
                                                     =======          =======
</TABLE>

13.  Comprehensive loss

The Company records items of comprehensive income or loss in accordance with
SFAS No.130, REPORTING COMPREHENSIVE INCOME, and presents such information in
the statement of stockholders' equity. The components of accumulated other
comprehensive loss are as follows (in thousands):

<TABLE>
<CAPTION>

                                                     Three months ended
                                                 February 28,      February 29,
                                                         2001              2000
                                                 ------------      ------------
<S>                                              <C>                <C>
      Net loss                                    $  (3,996)         $ (1,419)
      Cumulative translation adjustment                 (12)               (1)
      Unrealized holding gain (loss) on
         Available-for-sale securities                   46              (103)
                                                  ---------          --------
      Total comprehensive loss                    $  (3,962)         $ (1,523)
                                                  =========          ========
</TABLE>

14.  Segment Information

The Company applies the provisions of SFAS No. 131, DISCLOSURES ABOUT SEGMENTS
OF AN ENTERPRISE AND RELATED INFORMATION, which establishes standards for public
companies to report operating segment information in annual and interim
financial statements. 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 software Internet tools, services and digital video systems.


                                       12
<PAGE>

                                 MEDIA 100 INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                (UNAUDITED, EXCEPT FOR NOVEMBER 30, 2000 AMOUNTS)
                                   (Continued)

14.  Segment Information (continued)

The accounting policies of the segments are the same as those described in the
summary of significant accounting policies. Revenues are attributed to
geographic areas based on where the customer is located. Segment information for
the quarters ended February 28, 2001 and February 29, 2000 is as follows:

<TABLE>
<CAPTION>

                                      Software                Digital
                                      Internet                 Video
FEBRUARY 28, 2001                       Tools     Services    Systems    Corporate     Total
-----------------                     --------    --------    -------    ---------    -------
<S>                                  <C>         <C>         <C>          <C>        <C>
Net sales from external customers     $ 4,889     $ 2,532     $ 6,428      $   -      $ 13,849
                                      =======     =======     =======      =====      ========
Gross profit                            3,180       1,807       3,266          -         8,253
                                      =======     =======     =======      =====      ========
Depreciation and amortization             153          67         656          -           876
                                      =======     =======     =======      =====      ========
Interest income, net                        -           -           -        106           106
                                      =======     =======     =======      =====      ========
FEBRUARY 29, 2000
-----------------
Net sales from external customers     $ 7,416     $ 2,265     $ 8,239      $   -      $ 17,920
                                      =======     =======     =======      =====      ========
Gross profit                            4,235       1,994       4,155          -        10,384
                                      =======     =======     =======      =====      ========
Depreciation and amortization             151          18         715          -           884
                                      =======     =======     =======      =====      ========
Interest income                       $     -     $     -     $     -      $ 316      $    316
                                      =======     =======     =======      =====      ========
Tax provision                         $           $           $            $  30      $     30
                                      =======     =======     =======      =====      ========
</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 quarters ended February 28, 2001 and
February 29, 2000 were as follows (in thousands):
<TABLE>
<CAPTION>
                                                   February 28,     February 29,
                                                           2001             2000
                                                   ------------     ------------
  <S>                                               <C>             <C>
   United States                                     $  9,458        $ 10,645
   United Kingdom, Sweden, Denmark and Norway           1,222           1,486
   Germany, Austria and Switzerland                       552           1,544
   France, Spain and Benelux                              878           1,313
   Japan                                                  472             774
   Other foreign countries                              1,267           2,158
                                                     --------        --------
                                                     $ 13,849        $ 17,920
                                                     ========        ========
</TABLE>

Long-lived tangible assets by geographic area for the quarters ended February
28, 2001 and November 30, 2000 consist of the following (in thousands):

<TABLE>
<CAPTION>
                                                   February 28,     November 30,
                                                           2001             2000
                                                   ------------     ------------
  <S>                                               <C>             <C>
   United States                                     $ 5,614         $ 5,718
   United Kingdom                                        182             194
   Germany                                                42              33
   Italy                                                  13              16
   France                                                 95              95
                                                     -------         -------

                                                     $ 5,946         $ 6,056
                                                     =======         =======
</TABLE>


                                       13
<PAGE>
            ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                       CONDITION AND RESULTS OF OPERATIONS

Overview

     Media 100 Inc., a Delaware corporation, (the "Company") designs and sells
software applications, systems (comprising software and hardware), and services
(for encoding and hosting digital media) that allow Internet-based ("online")
and traditional broadcasters, corporate marketing professionals, and educators
to create and deliver high-quality video programs as either traditional media or
Internet-compatible streams ("streaming media).

     The Company recognizes revenue in accordance with Statement of Position,
"Software Revenue Recognition" (SOP 97-2) as amended by SOP 98-9,
"Modification of SOP 97-2, Software Revenue Recognition, with respect to
Certain Transactions". Net sales are recognized following establishment of
persuasive evidence of an arrangement, provided that the license fee is fixed
and determinable, delivery of product has occurred via physical shipment or
electronically, a determination has been made by management that collection
is probable and the Company has no remaining obligations. Revenues under
multiple element arrangements, which typically include products and
maintenance sold together, are allocated to each element using the residual
method in accordance with SOP 98-9. Sales to certain resellers and
distributors are subject to agreements allowing certain rights of return and
price protection on unsold merchandise held by these resellers and
distributors. The Company provides for estimated returns and refunds at the
time of shipment. The Company recognizes maintenance revenue from the sale of
post-contract support services ratably over the life of the contract. Revenue
from hosting services is recognized ratably over the term of the contract.
Revenue from encoding services is recognized as the services are performed
using the percentage of completion method.

Digital Origin Merger

     On May 9, 2000, the Company completed its merger with Digital Origin, Inc.
("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 has been accounted for as a pooling of interests.
As a result, all periods presented and Management's Discussion and Analysis of
Financial Condition and Results of Operations have been restated to reflect the
combined operations of the two companies.

     The Company also acquired Terran Interactive, Inc. ("Terran") in fiscal
1999 and Wired, Inc. ("Wired"), J2 Digital Media, Inc. ("J2"), 21st Century LLC
("21st Century") and certain strategic technology assets from Integrated
Computing Engines, Inc. ("ICE") in fiscal year 2000. Each of these acquisitions
was accounted for as a purchase pursuant to APB No. 16. As a result, the
operations of each acquired entity are reflected in the Company's consolidated
statement of operations from the date of acquisition.


                                       14
<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
                                                   February 28,     February 29,
                                                           2001             2000
                                                   ------------     ------------
  <S>                                               <C>             <C>
   Net sales:
      Products                                           81.7%          87.4%
      Services                                           18.3           12.6
                                                     --------        -------
   Total net sales                                      100.0          100.0
   Cost of sales                                         40.4           42.1
                                                     --------        -------
        Gross profit                                     59.6           57.9
   Operating expenses:
        Research and development                         28.0           20.4
        Selling and marketing                            35.2           28.6
        General and administrative                       13.8           14.2
         Amortization expense and write-down
             of intangible assets                        14.5            1.5
         Acquired in-process research and
             development                                    -            2.6
                                                     --------        -------
            Total operating expenses                     91.5           67.4
       Operating loss                                   (31.9)          (9.5)
   Interest income, net                                    .7            1.8
   Other income (expense), net                            2.3          (0.1)
                                                     --------        -------
            Loss before tax provision                   (28.9)          (7.8)
   Tax provision                                            -             .1
                                                     --------        -------
            Net loss                                    (28.9)%         (7.9)%
                                                     ========        =======
</TABLE>


Comparison of First Fiscal Quarter of 2001 to First Fiscal Quarter of 2000

     Net sales. Total net sales for the first fiscal quarter ended February 29,
2001 decreased 22.7% to $13.8 million from $17.9 million for the first quarter
of fiscal 2000. Net sales from products for the first fiscal quarter ended
February 28, 2001 decreased 27.7% to $11.3 million from $15.7 million for fiscal
2000. The decrease in net sales from products is due to a number of factors
including lower sales of software editing products acquired through the merger
with Digital Origin, Inc. ($2.1 million), lower unit sales and average selling
prices for our digital video systems ($1.8 million), and lower sales of the
MPEG-based products acquired in the acquisition of Wired, Inc. ($.6 million).
Net sales of software Internet tools for the first fiscal quarter ended February
28, 2001 decreased 34.0% to $4.9 million from $7.4 million for the first quarter
of fiscal 2000. Of the $2.5 million decrease in net sales of software Internet
tools, $2.1 million was due to a reduction in sales of products acquired as part
of the merger with Digital Origin, Inc. We anticipate this trend of lower
year-over-year net sales to continue for the next several quarters. Net sales of
digital video systems for the first fiscal quarter ended February 28, 2001
decreased 22.0% to $6.4 million from $8.2 million for the first quarter of
fiscal 2000. We attribute the decrease in sales to lower unit and average
selling prices of our digital video systems due to increased competition and
anticipate this trend in lower year-over-year sales will continue for the
remainder of fiscal 2001. Net sales from services for the first fiscal quarter
ended February 28, 2001 increased 11.8% to $2.5 million from $2.3 million for
the first quarter of fiscal 2000. The increase in net sales from services is due
to increased sales of our encoding and hosting services offered through
Streamriver. Streamriver was launched in June 2000 following the acquisitions of
21st Century Media LLP and J2 Digital Media, Inc. As discussed below, the
Company is currently considering the sale or disposition of the Streamriver
division.

     Gross profit. Gross profit decreased 20.5% to $8.3 million in the first
fiscal quarter of 2001 from $10.4 million in the first quarter of fiscal 2000.
Overall gross profit as a percentage of net sales increased to 59.6% in the
first fiscal quarter of 2001 from 57.9% in the first quarter of fiscal 2000.
Specifically, gross profit as a percentage of net product sales increased to
57.0% in the first fiscal quarter of 2001 from 53.6% in the first quarter of
fiscal 2000, while gross profit as a percentage of net sales of services
decreased to 71.4% in the first fiscal quarter of 2001 from 88.0% in the first
quarter of fiscal 2000. The percentage decrease in services resulted from
increased sales of encoding and hosting service which provide lower gross profit
as a percentage of net sales than customer support contracts for digital video
systems. Gross profit as a percentage of net product sales increased due to


                                       15
<PAGE>

higher gross profit from software Internet tools resulting from higher licensing
fees for our streaming media products such as Cleaner EZ and Cleaner 5. We
currently forecast overall gross profit as a percentage of net sales will be
relatively stable over the next several quarters, however, due to potential
fluctuations in the mix of products sold, gross profit as a percentage of net
sales may vary from one quarter to another.

     Research and development. Research and development expenses increased 6.4%
to $3.9 million in the first fiscal quarter of 2001 from $3.6 million in the
first quarter of fiscal 2000. Research and development expenses consist
primarily of salaries and related benefits, consultants, outside services,
occupancy and depreciation. At this time, we anticipate research and development
expenses will decrease over the next several quarters as we reduce the number of
new and existing product development efforts currently under development in an
effort to align our expense structure with our forecasted level of sales.

     Selling and marketing. Selling and marketing expenses decreased 5.0% to
$4.9 million in the first fiscal quarter of 2001 from $5.1 million in the first
quarter of fiscal 2000. 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, sales literature and lead generation activities. The
decrease in selling and marketing expenses resulted primarily from reduced
marketing expenses due to lower product sales of software Internet tools and
digital video systems. We currently anticipates that our selling and marketing
expenses will decrease over the next several quarters as we adjust our expense
structure and align our selling and marketing expenses with our forecasted level
of sales.

     General and administrative. General and administrative expenses decreased
25.2% to $1.9 million in the first fiscal quarter of 2001 from $2.6 million in
the first quarter of fiscal 2000. General and administrative expenses include
the cost of human resources, finance, information technology, legal and other
administrative functions of the Company. The decrease in general and
administrative expenses resulted primarily from lower legal expenses ($.3
million) and lower costs associated with doubtful accounts ($.2 million). We
currently anticipates that our general and administrative expenses will decrease
over the next several quarters as we adjust our expense structure and align our
general and administrative expenses with our forecasted level of sales.

     As a result of the merger with Digital Origin, Inc. on May 9, 2000, we
assumed a significant allowance for doubtful accounts balance of $3,803,000
related to several old, uncollected amounts owed to Digital Origin, Inc. As
of November 30, 2000, the allowance for doubtful accounts totaled $3,812,000,
of which $3,401,000 relates to Digital Origin. As of February 28, 2001, our
allowance for doubtful accounts totals $3,172,000 of which $2,670,000 relates
to Digital Origin. During the first quarter, we collected a portion of the
previously uncollected amounts due to Digital Origin, and wrote-down
approximately $731,000 of the remaining balance against the allowance for
doubtful accounts. One account represents approximately $2.2 million
allowance account and is awaiting resolution in pending litigation (See Note
9).

     Amortization and write-down of intangible assets. We recorded an expense
for the amortization and write-down of intangible assets of $2.0 million in
the first fiscal quarter of 2001 compared to $.3 million in the first fiscal
quarter of fiscal 2000. Included in the $2.0 million was amortization expense
associated with acquisitions which took place subsequent to Q1 2000,
amortization on contingent purchase price associated with the Terran
acquisition and a write-down of goodwill of $.9 million related to the
acquisitions of 21st Century LLC and J2 Digital Media, Inc. These two
acquisitions were combined to form Streamriver, which was launched in June
2000. During the first quarter of fiscal 2001, the goodwill from these two
acquisitions was determined to be impaired due to continued operating losses
in Streamriver and the uncertainty surrounding our ability to recover the
goodwill through future cash flows. The Company is currently considering the
sale or disposition of the Streamriver division.

     Acquired in-process research and development. In connection with the
acquisition of Wired in the first quarter of fiscal 2000, we allocated $470,000
of the purchase price to in-process research and development projects. This
allocation represented the 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 first fiscal quarter of 2001.

     Interest income, net. Interest income decreased 66.5% to $.1 million in the
first fiscal quarter of 2001 from $.3 million in the first quarter of fiscal
2000. The decrease in interest income is due to lower cash and cash equivalent
balances in fiscal 2001 versus 2000. During fiscal 2000, we purchased several
companies utilizing our existing cash and cash equivalents to pay for these
acquisitions. The Company currently anticipates interest income will decline in
fiscal 2001 versus 2000 due to lower cash balances.

     Other income (expense), net. Other income was $.3 million in the first
fiscal quarter of 2001 compared to other expense of $.02 million in the first
quarter of fiscal 2000. The increase is due to foreign exchange gains on
intercompany transactions with our foreign subsidiaries.


                                       16
<PAGE>

     Tax provision. We did not provide for a tax provision in the first
fiscal quarter of 2001 due to the net loss incurred during the first three
months of the fiscal year and its expectation for taxable income for the year.

     Net loss. As a result of the above factors, we had a loss for the first
fiscal quarter of 2001 in the amount of ($4.0) million, or ($0.32) per share,
compared to a net loss of ($1.4) million, or ($0.12) per share, in the first
quarter of fiscal 2000.

Liquidity and Capital Resources

     We have funded our operations to date primarily from public offerings of
equity securities and cash flows from operations. As of February 28, 2001, the
Company's principal sources of liquidity included cash and cash equivalents and
marketable securities totaling approximately $12.2 million.

     For the three months ended February 28, 2001, cash used in operating
activities was approximately $3,439,000 compared to approximately $3,506,000 for
the same period a year ago. The Company incurred a net loss of $3,996,000 offset
by significant non-cash items, including depreciation and amortization, in the
amount of $2,882,000. A significant portion of the cash used in operating
activities is attributable to a significant reduction in accounts payable of
$2,546,000. Accounts receivable provided cash in operating activities in the
amount of $1,215,000 due to the timing of sales in the quarter and the
subsequent collection of those sales, which resulted in days sales outstanding
of 49 in the first quarter of fiscal 2001. Inventory provided cash in operating
activities in the amount of $88,000 during the first quarter of fiscal 2001,
compared with inventory utilizing cash in operating activities of $1,926,000 in
the year ago period.

     Net cash provided by investing activities was approximately $4,2960,000
during the first three months of fiscal 2001, compared to cash used in investing
activities of approximately $2,106,000 for the same period a year ago. Cash
provided by investing activities during the first three months of fiscal 2001
consisted of net proceeds from the sale of marketable securities. The proceeds
from the sales of marketable securities was used to fund purchases of equipment
and working capital needs due to the net loss incurred the first three months of
fiscal 2001.

     Cash used in financing activities during the first three months of fiscal
2001 was approximately $1,269,000, compared to cash provided by financing
activities of $1,695,000 for the same period a year ago. Cash used in financing
activities resulted from the non-recurring payment of an acquisition-related
note payable in the amount of $1,492,000, offset by $223,000 from proceeds from
the issuance of common stock pursuant to stock plans. The reduction in cash
provided by financing activities that came from proceeds from the issuance of
common stock pursuant to stock plans is due to a significantly lower price for
the Company's common stock in the first quarter of fiscal 2001 versus the same
period a year ago. Given the recent reduced price of the Company's common stock,
we do not currently expect cash provided by proceeds from the issuance of common
stock pursuant to stock plans to be a significant source of liquidity in fiscal
2001.

     As of February 28, 2001, the Company's principal sources of liquidity
included cash and marketable securities. The Company believes that its current
cash, marketable securities and cash provided by future operations will be
sufficient to meet the Company's working capital and anticipated capital
expenditures requirements for at least the next twelve months. Although
operating activities may provide cash in certain periods, to the extent the
Company experiences growth in the future, its operating and investing activities
may require significant cash. Consequently, any such future growth may require
the Company to obtain additional equity or debt financing.

CAUTIONARY STATEMENTS

     This Quarterly Report on Form 10-Q contains forward-looking statements
within the meaning of the Securities Litigation Reform Act of 1995 that involve
risks and uncertainties. Our actual results could differ materially from those
anticipated in these forward-looking statements as a result of certain factors,
including those set forth in the following cautionary statements and elsewhere
in this Quarterly Report on Form 10-Q. If any of the following risks were to
occur, our business, financial condition, or results of operations would likely
suffer. In that event, the trading price of our common stock would decline.

MERGER AND ACQUISITION RELATED RISKS. During fiscal year ended November 30,
2000, we completed the merger with Digital Origin and the acquisitions of Wired,
21st Century, and J2. In addition, we completed the acquisition of certain
assets of ICE. Our business and results of operations could be materially
adversely affected in the event we fail to complete publicly announced
acquisitions or to successfully integrate the business and operations of the
merger or the acquisitions. In the future, we may continue to acquire or merge
with existing businesses, products, and technologies to enhance and expand our
line of products.


                                       17
<PAGE>

Such mergers and acquisitions may be material in size and in scope. There can
be no assurance that we will be able to identify, acquire, or profitably
manage additional business or successfully integrate any acquired businesses
into our business 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 our 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, as well as the
diversion of management's attention during the acquisition and integration
process. We may not be able to operate the acquired businesses properly and
may not be able to successfully recover amounts paid for such businesses.
Some or all of these special risks and factors may have a material adverse
impact on our business, operating results, and financial condition and, as a
result, may negatively affect the market price of our common stock.

SIGNIFICANT FLUCTUATIONS AND UNPREDICTABILITY OF OPERATING RESULTS. Our
quarterly operating results are difficult to predict, have varied significantly
in the past and are likely to vary significantly in the future for a number of
reasons, including new product announcements and introductions by ourselves or
our competitors, changes in pricing, and the volume and timing of orders
received during the quarter. Also, in the past, we have 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 our 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. For these reasons, you should not rely on
period-to-period comparisons of our financial results to forecast our future
performance. It is likely that in some future quarter or quarters our operating
results will be below the expectations of securities analysts or investors. If
quarterly revenue or earnings levels fail to meet internal or external
expectations, the market price of our common stock may decline significantly.

EMERGING MARKETS. The markets in which we offer our software and systems
products and services are intensely competitive and rapidly changing. We are
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. Our success in this emerging market will
depend on the rate at which the market develops and our ability to penetrate
that market. We will not succeed if we cannot compete effectively in this market
and, as a result, our business and operating results could be materially and
adversely affected.

RISKS ASSOCIATED WITH DEVELOPMENT AND INTRODUCTION OF NEW PRODUCTS. If we are
not successful in developing and introducing new products to the markets we
serve our business and operating results will suffer. In addition, new product
announcements by our competitors and by us could have the effect of reducing
customer demand for our existing products. Also, when we introduce new or
enhanced products we must effectively manage the transitions from existing
products to minimize disruption of orders from our customers. New product
introductions require us to devote time and resources to the training of our
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. Our failure to effectively manage 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 and, as a result, our operating results will
suffer.

RAPID TECHNOLOGICAL CHANGE. The market for our products is characterized by
rapidly changing technology, evolving industry standards and frequent new
product introductions. Our future success will depend in part upon our ability
to enhance 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 our existing products obsolete. We plan
to continue to invest in research and development, in connection with our
development strategy. Any delay or failure on our part 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 our business and operating results and our stock price will suffer.

COMPETITION. The market for our 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 our products, including Accom, Inc.,
AnyStream, Inc., Adobe Systems Inc., Apple Computer Inc., Avid Technology, Inc.,
Discreet (a division of Autodesk, Inc.), FAST Electronic GmbH, Loudeye
Technologies, Inc., Matrix Electronic Systems Ltd., Pinnacle Systems, Inc., Real
Networks Inc., and Sonic Foundry, Inc. In addition, we expect 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 our products. Many of these current and potential
competitors have greater financial, technical and marketing resources than us,
including, without limitation, larger and more established selling and marketing
capabilities, greater brand recognition and a larger installed base of
customers, and well-established relationships with


                                       18
<PAGE>

our existing and potential customers, complementary technology vendors and other
business partners. As a result, our competitors may be able to develop products
comparable to or superior to our own products, adapt more quickly than us 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 we could
not operate profitably, the occurrence of any of which could have a material
adverse effect on our business and operating results. In this regard, we believe
that it will continue to experience competitive pressure to reduce prices,
particularly for our high data rate systems. We have historically realized
higher gross profit on the sale of these high data rate systems, and such
continued competitive pricing pressure could result in lower sales and gross
margin, which in turn could adversely affect our business and operating results
and negatively affect the price of our common stock.

DEPENDENCE ON AND COMPETITION WITH APPLE COMPUTER, INC. As a competitor, Apple
Computer, Inc. ("Apple") could, in the future, inhibits our ability to develop
our 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 our 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 our products. We rely on access to key
information from Apple to continue development of our products and any failure
to continue supplying our engineers with this information could have a material
adverse affect on our business and financial results and negatively affect the
price of our common stock.

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

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 that have no ready substitutes, including various audio and video
signal processing integrated circuits manufactured in each case only by Crystal
Semiconductor Corp., Raytheon Company, LSI Logic Corp., Philips Semiconductors
or Zoran Corp. The availability of many of these components is dependent on our
ability to provide suppliers with accurate forecasts of our future requirements,
and certain components we use to build our products have been subject to
industry-wide shortages. We do not carry significant inventories of these
components and have no guaranteed supply arrangements with such suppliers. There
can be no assurance that our inventory levels will be adequate to meet
production needs during any interruption of supply. Our 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 our business and operating results in any
given period and negatively affect the price of our common stock.

DEPENDENCE ON PROPRIETY TECHNOLOGY. Our ability to compete successfully and
achieve future revenue growth will depend, in part, on our ability to protect
our proprietary technology and operate without infringing the rights of others.
Previously, we have received, and may in the future continue to receive,
communications suggesting that our products may infringe on the patents or other
intellectual property rights of third parties. Our 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 we 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. Any failure to secure the
necessary intellectual property right of third parties on commercially
reasonable terms may adversely affect our business and operating results and
negatively affect the price of our common stock.

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 us or to enforce trade secrets, trademarks and
other intellectual property rights owned by us, to defend ourselves 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 Item 1, Legal Proceedings
of Part II, Other Information and Note 9 to the Consolidated Financial
Statements included herein. Any such litigation could be costly and a diversion
of management's attention, which could adversely affect our business and
operating results and our financial condition. Adverse determinations in any
such litigation could result in the loss of our proprietary rights, subject us
to significant liabilities, require us to seek licenses from third parties or
prevent us from manufacturing or selling our products, any of which could
adversely affect our business and operating results and our financial condition.

DEPENDENCE ON DISTRIBUTORS AND RESELLERS. We rely primarily on our worldwide
network of independent distributors and VARs to distribute and sell our products
to end-users. Our distributors and resellers generally offer products of several
different


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companies, including in some cases products that are competitive with our own
products. In addition, many of the VARs are small organizations with limited
capital resources. There can be no assurance that our distributors and resellers
will continue to purchase products from us, or that our efforts to expand our
network of distributors and resellers will be successful. Any significant
failure on our part to maintain or expand our network or distributors and
resellers could have a material adverse effect on our business and operating
results and negatively affect the price of our common stock.

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 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. Our international sales are also subject to more seasonal
fluctuation than domestic sales. In this regard, the traditional summer vacation
period, which occurs during our 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 our future international operations and
consequently, on our business and operating results. This fluctuation may be
material and negatively affect the price of our common stock.

INTERNET-BASED SALES. In the second half of fiscal 1999, we implemented
e-commerce systems allowing customers to purchase our products directly from one
of our web sites. Since implementation of the e-commerce system, our sales
through this channel have increased as a percentage of our total sales. There
can be no assurances that our customers will continue to purchase our products
from one of our web sites or that these web sites will not experience technical
difficulties thereby causing customers to delay purchases. Any significant
technical difficulties could have a material adverse affect on our business and
operating results and negatively affect the price of our common stock.

DEPENDENCE ON KEY PERSONNEL. Competition for employees with the skills required
by us is intense in the geographic areas in which we maintain physical
operations. We believe that our future success will depend on our continued
ability to attract and retain qualified employees, especially in research and
development. Any significant delay in hiring key personnel could have a material
adverse affect on our business and operating results and negatively affect the
price of our common stock.

HISTORY OF LOSSES. We have incurred substantial operating losses in each of the
past five fiscal years. We incurred operating losses of approximately $10.9
million, $2.0 million, $13.9 million, $27.2 million and $16.0 million for fiscal
2000, 1999, 1998, 1997 and 1996, respectively. As of February 28, 2001, we had
an accumulated deficit of approximately $193.4 million. Over the past three
years we have significantly increased our research and development expenses as a
percentage of total sales and we plan to continue to invest in new technology,
and as a result, we may incur operating losses in future periods. We will need
to generate increases in our current sales levels to achieve profitability and
we may not be able to do so. If our sales grow more slowly than we anticipate or
if our operating expenses increase more than we expect or cannot be reduced in
the event of lower revenue, our business will be significantly and adversely
affected. Our failure to achieve profitability or achieve the level of
profitability expected by investors and securities analysts may adversely affect
the market price of our common stock.

STOCK PRICE VOLATILITY. The trading price of our common stock has been highly
volatile and has fluctuated significantly in the past. During fiscal 2000, our
stock price fluctuated between a low of $2.125 per share and a high of $52.75
per share. We believe that the price of our common stock may continue to
fluctuate significantly in the future in response to a number of events and
factors relating to our company, our competitors, and the market for our
products and services, many of which are beyond our control, such as, variations
in our quarterly operating results; changes in financial estimates and
recommendations by securities analysts; changes in market valuations of
companies in our markets; announcements by us or our competitors of significant
products, acquisitions, or strategic partnerships; failure to complete
significant business transactions; departures of key personnel; purchases or
sales of common stock or other securities by us; or news relating to trends in
our markets. In addition, the stock market in general, and the market for
technology companies in particular, have experienced extreme volatility over the
past twelve months. This volatility has often been unrelated to the operating
performance of particular companies. These broad and industry fluctuations may
adversely affect the market price of our common stock, regardless of our
operating performance.

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. We maintain operations within the European Union and have
prepared for the Euro conversion. We do 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 our business, financial condition and
financial results.


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<PAGE>

Item 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Derivative Financial Instruments, Other Financial Instruments and Derivative
Commodity Instruments. The Company is not a party to any derivative financial
instruments or 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 believes that the market risk of such
investments is minimal.

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 U.S. currency.
The Company has no foreign exchange contracts, option contracts or other foreign
hedging arrangements. However, the Company estimates that any market risk
associated with its foreign operations is not significant and is unlikely to
have a material adverse effect on the Company's business, results of operations,
or financial condition.


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<PAGE>

                           PART II. OTHER INFORMATION

Item 1. Legal Proceedings

(i) 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.

On August 16, 2000, the U.S. Patent and Trademark Office issued an Office Action
rejecting all of the claims made by Avid in their latest request for
reexamination of the patent related to the aforementioned lawsuit. In addition,
the Examiner at the U.S. Patent and Trademark Office designated the action as
"final". On November 29, 2000, Avid filed a Notice of Appeal of the Examiner's
rejections to the U.S. Patent and Trademark Office Board of Patent Appeals and
Interferences. There can be no assurance that the Company will prevail in the
appeal by Avid or that the expense or other effects of the appeal, whether or
not the Company prevails, will not have a material adverse effect on the
Company's business, operating results and financial condition.

(ii) 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 Digital
Origin. The complaint further alleges that Digital Origin 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 two initial motions to dismiss the action were granted with leave to
amend, and plaintiffs have again amended the complaint. Defendants have now
filed their third motion to dismiss.

(iii) On July 18, 1997, Intelligent Electronics, Inc. filed a claim against
Digital Origin 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 existing accounts receivable of approximately $1.8 million. During
May 2000, the trial was completed and the Court entered two judgments in favor
of Digital Origin, one in the amount of $314,000 plus interest against
Intelligent Electronics and one in the amount of $1,491,000 plus interest
against Deutsche Financial, Inc. In September 2000, Intelligent Electronics,
Inc. paid $314,000 plus interest of $139,000 and reimbursement of certain costs
in the amount of $20,000 to the Company. Deutsche Financial, Inc. has filed an
appeal, which is expected to be heard during 2001.

(iv) On October 12, 1999, a lawsuit was filed against the Company by McRoberts
Software, Inc. in the United States District Court for the Southern District of
Indiana. The complaint alleges copyright infringement, breach of contract, and
trade secret misappropriation. The complaint includes requests for injunctive
relief, treble damages, interest, costs and fees. In November 1999, we filed an
answer and counterclaim denying any infringement. We intend to vigorously defend
the lawsuit.

 (v) 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.


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<PAGE>

Item 6. Exhibits and Reports on Form 8-K

a)  Exhibits

No exhibits were required as part of this Quarterly Report on Form 10-Q.

b)  Reports on Form 8-K

         Form 8-K, dated December 29, 2000, was filed with the Commission on
December 29, 2000, consisting of the following: Item 5. Other events, and Item
7. Financial Statements, Pro Forma Financial Information and Exhibits detailing
the acquisition of Digital Origin, Inc.


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<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:    April 16, 2001        By:  /S/ STEVEN D. SHEA
                                 ---------------------
                                      Steven D. Shea
                                       Chief Financial Officer and

                                     Treasurer
                                     (Principal Financial Officer)









                                       24

<PAGE>



                                  EXHIBIT INDEX

      NUMBER                              DESCRIPTION











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