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 March 31, 1999

                                       or

      [ ]     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 0-25036


                                 VIDEONICS, INC.
             (Exact name of Registrant as specified in its charter)


       California                                              77-0118151
(State or other jurisdiction of                             (I.R.S. Employer
incorporation or organization)                              Identification No.)


                   1370 Dell Ave, Campbell, California 95008
               (Address of principal executive offices)(Zip Code)

       Registrant's telephone number, including area code: (408) 866-8300

       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 [ ]

       As of April 30, 1999,  there were  5,867,649  shares of the  Registrant's
Common Stock outstanding.



<PAGE>

                          PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

                                 VIDEONICS, INC.
                       CONDENSED STATEMENTS OF OPERATIONS
                      (in thousands, except per share data)
                                   (unaudited)

                                                             Quarter Ended
                                                               March 31,
                                                             -------------
                                                          1999           1998
                                                         -------        -------

Net revenues                                             $ 3,665        $ 4,719
Cost of revenues                                           2,207          2,977
                                                         -------        -------
            Gross profit                                   1,458          1,742
                                                         -------        -------

Operating expenses:
   Research and development                                  898          1,382
   Selling and marketing                                     996          1,641
   General and administrative                                374            424
                                                         -------        -------
                                                           2,268          3,447
                                                         -------        -------
               Operating loss                               (810)        (1,705)

Interest expense, net                                        (13)            (1)
                                                         -------        -------

               Net loss                                  $  (823)       $(1,706)
                                                         =======        =======

Net loss per common share - basic
 and diluted                                             $ (0.14)       $ (0.29)
                                                         =======        =======

Shares used in computing net loss per
 common share - basic and diluted                          5,858          5,790
                                                         =======        =======


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

                                        2


<PAGE>


                                 VIDEONICS, INC.
                            CONDENSED BALANCE SHEETS
                                 (in thousands)


                                                         March 31, December  31,
                           ASSETS                          1999        1998
                                                         --------    --------
                                                        (unaudited)
Current assets:
   Cash and cash equivalents                             $    764    $    837
   Accounts receivable, net                                   899         852
   Inventories                                              5,074       5,830
   Prepaid and other current assets                           212         122
                                                         --------    --------
            Total current assets                            6,949       7,641

Property and equipment, net                                 1,195       1,507
Other assets                                                   16          16
                                                         --------    --------
               Total assets                              $  8,160    $  9,164
                                                         ========    ========

                        LIABILITIES

Current liabilities:
   Note payable to shareholder                           $  1,000    $  1,000
   Accounts payable                                           973         947
   Accrued expenses                                         1,083       1,290
                                                         --------    --------
            Total current liabilities                       3,056       3,237
                                                         --------    --------

   SHAREHOLDERS' EQUITY

Common stock, no par value:
   Authorized:  30,000 shares
   Issued and outstanding: 5,858 shares at
      March 31, 1999 and 5,858 shares at
      December 31, 1998                                    20,647      20,647

Retained deficit                                          (15,543)    (14,720)
                                                         --------    --------
            Total shareholders' equity                      5,104       5,927
                                                         --------    --------

             Total liabilities and shareholders' equity  $  8,160    $  9,164
                                                         ========    ========


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

                                       3
<PAGE>

                                 VIDEONICS, INC.
                       CONDENSED STATEMENTS OF CASH FLOWS
                                 (in thousands)
                                   (unaudited)



                                                               Quarter Ended
                                                                 March 31,
                                                               -------------
                                                              1999        1998
                                                             -------    -------
Cash flows from operating activities:
        Net cash used in operating activities                $  (104)   $  (439)
                                                             -------    -------

Cash flows from investing activities:
      Cash received from sale of Nova                             52       --
Purchase of property and equipment                               (21)      (155)
                                                             -------    -------
        Net cash provided by (used in) investing activities       31       (155)
                                                             -------    -------

Cash flows from financing activities:
      Proceeds from issuance of note payable                    --          619
      Proceeds from issuance of common stock                    --           13
                                                             -------    -------
        Net cash provided by financing activities               --          632
                                                             -------    -------

Increase (decrease) in cash and cash equivalents                 (73)        38

Cash and cash equivalents at beginning of year                   837        992
                                                             -------    -------

Cash and cash equivalents at end of quarter                  $   764    $ 1,030
                                                             =======    =======


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

                                       4
<PAGE>


                                 VIDEONICS, INC.
                   NOTES TO THE CONDENSED FINANCIAL STATEMENTS


1.       The condensed financial  statements at March 31, 1999 and for the three
         month  period then ended are  unaudited  (except for the balance  sheet
         information  as of  December  31,  1998,  which  is  derived  from  the
         Company's  audited  financial  statements)  and reflect all adjustments
         (consisting  only of normal  recurring  adjustments)  which are, in the
         opinion  of  management,  necessary  for a  fair  presentation  of  the
         financial  position and operating results for the interim periods.  The
         condensed  financial  statements should be read in conjunction with the
         financial  statements  and notes  thereto,  together with  management's
         discussion   and  analysis  of  financial   condition  and  results  of
         operations,  contained in the Company's  Annual Report on Form 10-K for
         the year ended December 31, 1998, as amended. The results of operations
         for the  three-month  period  ended March 31, 1999 are not  necessarily
         indicative of the results for the year ending December 31, 1999, or any
         future interim period.

2.       Inventories comprise (in thousands):

                                                      March 31,     December 31,
                                                        1999           1998
                                                       ------         ------
                                                    (unaudited)
            Raw materials                             $ 4,010         $4,381
            Work in process                               382            375
            Finished goods                                682          1,074
                                                       ------         ------
                                                       $5,074         $5,830
                                                       ======         ======

3.       Note Payable to Shareholder:

         At March 31, 1999,  the Company has an  unsecured  loan from a director
         and significant shareholder of the Company. This loan, in the amount of
         $1,000,000,  bears  interest at 8% per year,  and is due on October 16,
         1999. Accrued interest is payable on a quarterly basis. The shareholder
         has agreed  that,  at the  Company's  option,  the loan may be extended
         until January 2000.

                                       5
<PAGE>


                                 VIDEONICS, INC.
                   NOTES TO THE CONDENSED FINANCIAL STATEMENTS


4.       Sale of Nova Systems:

         On January 29, 1999,  the Company  completed the sale of certain assets
         and the assumption of certain  liabilities  related to its Nova Systems
         Division ("Nova") to a privately held company in Massachusetts. For the
         year ended  December 31, 1998,  Nova recorded  revenues of $1.9 million
         and a loss from operations of $248,000. For the year ended December 31,
         1997, Nova recorded revenues of $2.8 million and a loss from operations
         of  $1.4   million,   which   included  a  write-off   of  $700,000  of
         non-performing  assets.  Additionally in 1997, Videonics wrote off $1.9
         million of  intangibles  related to Nova.  The sale of Nova may provide
         Videonics  with net  revenues  from  royalties  of up to a  maximum  of
         approximately  $450,000,  contingent upon future sales of Nova products
         by the acquiring company. Royalties will be paid, to the extent due, by
         the acquiring  company on a monthly basis from March 1999 until receipt
         of the  approximately  $450,000.  The sale of Nova did not  result in a
         material capital gain or loss to Videonics.

5.       Segment Information:

         In 1998,  Videonics  adopted SFAS 131. At December 31, 1998,  Videonics
         presented two reportable segments - (1) Video Production and (2) Signal
         Processing.

         The Company's "Video Production"  segment  manufactures and sells video
         post-production  equipment  into  broadcast,  cable,  industry and home
         producer markets. The Company's "Signal Processing" segment,  which was
         represented  by the  Company's  Nova  Division,  manufactured  and sold
         signal  conversion and processing  equipment  primarily into television
         and cable  studios.  As described in Note 4, the Company's  Nova System
         Division ("Signal Processing" segment) was sold on January 29, 1999.

         The table below presents  information  about reported  segments for the
         quarters ending March 31, (in thousands):

                                                   1999             1998
                                                   ------           -----
         Video Production
           Sales                                   $3,574          $4,200
           Operating loss                            (774)         (1,644)

         Signal Processing
           Sales                                       91 (1)         519
           Operating loss                             (36)(1)         (61)

         (1) Results  presented  are  through  January  29,  1999,  the date the
         Company completed its sale of Nova.


                                       6
<PAGE>

                                 VIDEONICS, INC.
                   NOTES TO THE CONDENSED FINANCIAL STATEMENTS


6.       Recent Accounting Pronouncement:

         In June of  1998,  the  Financial  Accounting  Standards  Board  issued
         Statement No. 133,  "Accounting for Derivative  Instruments and Hedging
         Activities",  (SFAS 133) which  establishes  accounting  and  reporting
         standards for derivative  instruments,  and for hedging activities.  It
         requires that an entity  recognize all  derivatives as either assets or
         liabilities  in the  statement of financial  position and measure those
         instruments at fair value. Management has evaluated the effects of this
         standard and believes there will be no material impact on the Company's
         financial  position or results of  operations.  The Company  will adopt
         SFAS 133 as required for its first quarterly filing of the year 2000.


                                       7
<PAGE>



Item 2.  Management's Discussion and Analysis of Financial Condition and
         Results of Operations

         The following discussion in this section  "Management's  Discussion and
Analysis  of   Financial   Condition   and  Results  of   Operations"   contains
forward-looking   statements  within  the  meaning  of  the  Private  Securities
Litigation  Reform  Act  of  1995,   particularly  statements  regarding  market
opportunities,   market   share   growth,   competitive   growth,   new  product
introductions, success of research and development expenses, customer acceptance
of new products,  gross margin and selling, general and administrative expenses.
These  forward-looking  statements  involve  risks  and  uncertainties,  and the
cautionary statements set forth below,  specifically those contained in "Factors
That May Affect Future Results of Operations,"  identify  important factors that
could cause actual results to differ materially from those predicted in any such
forward-looking  statements.  Such  factors  include,  but are not  limited  to,
adverse changes in general economic conditions, including adverse changes in the
specific  markets  for the  Company's  products,  adverse  business  conditions,
decreased or lack of growth in the market for video  post-production  equipment,
adverse  changes in customer  order  patterns,  increased  competition,  lack of
acceptance of new products,  pricing pressures, lack of success in technological
advancements,  risks associated with foreign  operations,  risks associated with
the Company's efforts to comply with Year 2000 requirements, and other factors.


Results of Operations

         Net  Revenues.  Net  revenues  decreased  approximately  22% from  $4.7
million  in the first  quarter of 1998 to $3.7  million in the first  quarter of
1999.  The decrease in revenue was due in part to the sale of the Company's Nova
Division and decreased sales of the Company's older videographer products.

         Gross  Profit.  Gross  profit  decreased  approximately  16% from  $1.7
million  in the first  quarter of 1998 to $1.5  million in the first  quarter of
1999.  The decrease in gross profit is primarily due to the sale of Nova.  Gross
profit,  as a percentage of net revenues,  increased to approximately 40% in the
first quarter of 1999 from  approximately 37% for the first quarter of 1998. The
increase in gross  profit as a  percentage  of revenues  is due  primarily  to a
change in product mix.

         Research and Development.  Research and development  expenses decreased
approximately  35% to $898,000 during the first quarter of 1999 compared to $1.4
million in the first quarter of 1998. The decrease was due to the Company's sale
of Nova, a decrease in personnel and reduced use of consultants.

         Selling  and  Marketing.   Selling  and  marketing  expenses  decreased
approximately  39% to  $996,000  in the first  quarter of 1999  compared to $1.6
million in the first quarter of 1998.  As a percentage  of net  revenues,  these
expenses  decreased to 27% in the first  quarter of 1999  compared to 35% in the
first  quarter of 1998.  The decrease was due to the  Company's  sale of Nova, a
decrease in personnel and reduced advertising expenses.


                                       8
<PAGE>


         General  and  Administrative.   General  and  administrative   expenses
decreased approximately 12% to $374,000 in the first quarter of 1999 compared to
$424,000 in the first quarter of 1998.  Expenses as a percentage of net revenues
were  essentially flat between  quarterly  comparison  periods.  The decrease in
actual expenses was primarily due to the sale of Nova.

         Interest  Expense,  net.  Interest expense  increased to $13,000 in the
first  quarter of 1999  compared  to $1,000 in the first  quarter of 1998.  This
difference is primarily due to interest  expense  calculated on the $1.0 million
note  payable to a director and  significant  shareholder  of the Company,  only
partially  offset  by  interest  income on lower  cash  balances  available  for
investment.

         Benefit from Income  Taxes.  During the first quarter of 1999 and 1998,
the Company  maintained  a 100%  valuation  allowance  against its  deferred tax
assets due to the uncertainty  surrounding the realization of such assets. If it
is  determined  that it is more likely than not that the deferred tax assets are
realizable, the valuation allowance will be reduced.


         Factors  That May Affect  Future  Results of  Operations:  The  Company
believes  that in the future its  results of  operations  could be  impacted  by
factors such as delays in development and shipment of the Company's new products
and major new versions of existing  products,  market acceptance of new products
and  upgrades,  growth  in the  marketplace  in which it  operates,  competitive
product offerings,  and adverse changes in general economic conditions in any of
the countries in which the Company does business. The Company's results in prior
years  have  been  affected  by these  factors,  particularly  with  respect  to
developing and introducing new products such as PowerScript,  MXPro,  Python and
Effetto Pronto in 1996, 1997 and 1998.

         Due primarily to the factors noted above,  the Company has  experienced
substantial  volatility in its  operations.  The Company's  future  earnings and
stock price may continue to be subject to significant  volatility,  particularly
on a quarterly  basis. Any shortfall in revenue or earnings from levels expected
by  securities  analysts  or  anticipated  by the  Company  based  upon  product
development and  introduction  schedules could have an immediate and significant
adverse  effect on the trading price of the Company's  common stock in any given
period. Additionally, the Company may not learn of such shortfalls until late in
the fiscal  quarter,  which could result in an even more  immediate  and adverse
effect on the trading price of the Company's common stock.  Finally, the Company
participates  in a highly dynamic  industry,  which often results in significant
volatility of the Company's common stock price. See the Company's 1998 Form 10-K
section entitled "Business - Research and Development".

Year 2000 Update

         Many currently installed computer systems,  software products and other
equipment  utilizing  microprocessors are coded to accept only two digit entries
in the date code  field.  These date code  fields will need to accept four digit
entries to distinguish  twenty-first century dates from twentieth century dates.
This is commonly referred to as the "Year 2000 issue."

         The Company is aware of the Year 2000 issue and has commenced a program
to identify,  remediate,  test and develop plans to address the Year 2000 issue.
Its  corporate  networks and  computing  hardware  operate on Unix and Microsoft
Windows  NT  Operating  Systems.  The  Company  relies on its  fully  integrated
Computer   Associates   MANMAN  system  ("MIS   system")  for  all 


                                       9
<PAGE>

accounting,  manufacturing,  and procurement functions. The Company makes use of
EDI and other forms of  electronic  data  exchange with two of its customers and
one  financial  institution.  The Company  has no  automated  manufacturing,  or
automated testing systems which could be materially  adversely  affected by Year
2000 problems.

         As of March 1999, the Company had completed several Year 2000 projects,
including  upgrades of its Windows NT Operating System and tape backup software,
upgrade  of its UNIX  workstations,  evaluation  of the  Company's  MIS  system,
evaluation of the Company's  email and servers,  evaluation of network  routing,
interconnect,  and firewall hardware and software compliance,  evaluation of the
Company's  telephone,  security,  and voicemail  equipment and evaluation of the
Company's products.  The Company's review of the Year 2000 issue with respect to
its internal systems preliminarily indicates no material problems.

         As of March 1999,  the  following  Year 2000  projects  are in process:
completion  of the new email  system  and the  conversion  of email from the old
system,  upgrade of the UNIX  Operating  System for the  HP3000  hardware  which
supports the Company's MIS system (expected  completion is May 1999). Upgrade of
the MIS system  software  (expected  completion is June 1999),  development of a
list of critical  vendors and  identification  of any material  vendor  problems
(expected  completion is May 1999) and  evaluation of the Company's EDI partners
(expected completion is May 1999).  Although testing is not complete, it appears
that the Company's  products are "Year 2000 compliant"  although,  some products
may require the user to perform a simple  reset of the product  (ongoing  during
1999).  As of February 1999,  the Company's  aggregate  expenditures  (excluding
employee  costs) in  connection  with Year  2000  compliance  has been less than
$10,000 and the Company  estimates the total cost of its Year 2000 projects will
be approximately $50,000.

         The Company  currently does not  anticipate  that the cost of Year 2000
compliance will be material to its financial condition or results of operations.
However,  satisfactorily  addressing  the Year 2000 issue is  dependent  on many
factors, some of which are not completely within the Company's control. Further,
the  Company  does not  currently  have any  contingency  plans if its  planning
activities fail.  Should the Company's  internal systems or the internal systems
of one or more significant  vendors,  manufacturers or suppliers fail to achieve
Year 2000 compliance, the Company's business and its results of operations could
be adversely affected. The failure to correct a material Year 2000 problem could
result in an interruption in, or failure of, certain normal business  activities
or operations. Due to the general uncertainty inherent in the Year 2000 problem,
resulting in part from the uncertainty of the Year 2000 readiness of third-party
suppliers and customers, the Company is unable to determine at this time whether
the  consequences  of Year  2000  failures  will have a  material  impact on the
Company's results of operations, liquidity or financial condition. The Company's
Year 2000 compliance  project is expected to significantly  reduce the Company's
level of  uncertainty  about the Year 2000 issue and, in  particular,  about the
Year 2000  compliance  and readiness of third parties it deals with. The Company
believes that, with the implementation of new business systems and completion of
the project as scheduled, the possibility of significant interruptions of normal
operations should be reduced.

         The foregoing  statements  are forward  looking.  The Company's  actual
results could differ because of several  factors,  including  those set forth in
the subsection entitled "Factors That May Affect Future Results of Operations".


                                       10
<PAGE>


Liquidity and Capital Resources

         From the  Company's  inception  until its  initial  public  offering in
December  1994,  which resulted in net proceeds to the Company of $15.8 million,
the Company financed its operations through private sales of equity, shareholder
loans,  cash flow from operations,  and bank borrowings.  At March 31, 1999, the
Company's  principal  source of  liquidity  is cash of  approximately  $764,000.
Additionally,  at March 31, 1999, the Company had borrowings from a director and
significant  shareholder  totaling  $1.0 million at an interest rate of 8.0% per
year,  due October 16, 1999. The  shareholder  has agreed that, at the Company's
option, the loan may be extended until January 2000.

         Net cash used by operations  was $104,000 for the first quarter of 1999
compared  to  $439,000  for the same  period  last  year.  The use of cash  from
operating  activities  during  the  first  quarter  of 1999 is due to a net loss
before depreciation and a decrease in accrued expenses,  substantially offset by
a decrease in inventories.  The use of cash from operating activities during the
first quarter of 1998 is primarily due to a net loss before the  provisions  for
doubtful accounts, excess and obsolete inventories and depreciation, an increase
in receivables, offset partially by a decrease in inventories and prepaid income
taxes and an increase  in  accounts  payable.  Net cash  provided  by  investing
activities  for the first quarter of 1999 was $31,000,  as the Company  received
$52,000 in connection  with the sale of Nova,  offset  partially by property and
equipment  expenditures  primarily  for  computers,   software  and  engineering
equipment used in research and development and other  activities.  Net cash used
by  investing  activities  for the first  quarter of 1998 was  $155,000,  due to
property  and  equipment  expenditures  primarily  for  computers,  software and
engineering  equipment used in research and  development  and other  activities.
Financing  activities during the first quarter of 1999 did not provide cash. Net
cash  provided  in  financing  activities  during the first  quarter of 1998 was
$632,000  primarily  from the  Promissory  Note and the receipt of cash from the
exercise of the stock options issued under the Company's Stock Option Plans.

         The Company has incurred losses and negative cash flows from operations
for each of the two years in the period  ended March 31,  1999 and is  dependent
upon support from a director and  significant  shareholder  and upon  generating
sufficient  revenues from existing and soon to be released  products in order to
fund operations.  This shareholder has agreed that, at the Company's option, the
loan may be extended until January 2000. In addition, Management has taken steps
to reduce  costs,  including  the sale of its Nova Systems  Division,  which had
incurred  losses in each of the two years in the period ended December 31, 1998.
The Company is assessing its product  lines to identify how to enhance  existing
or create new distribution channels.  During 1999, the Company is developing and
expects to release two next  generation  products for its core Video  Production
segment.  The  Company  believes  that  its  current  cash,  borrowings  from  a
shareholder,  together with its operating cash flows, will be sufficient to meet
the  Company's  requirements  for working  capital,  and  capital  expenditures,
through the end of 1999. The Company does not currently have any commitment from
a commercial  source or its director and significant  shareholder to provide any
additional funding as of the date of this report.


                                       11
<PAGE>


Item 3. Quantitative and Qualitative Disclosure about Market Risk

         The  Company's  market  risk  disclosures  pursuant  to  Item 3 are not
material and are therefore not required.




                                       12
<PAGE>

                           PART II. OTHER INFORMATION

Item 6.    Exhibits and Reports on Form 8-K

(a)        Exhibits

           Exhibit No.           Description of Document
           -----------           -----------------------

           10.11                Key Employee  Agreement between Jeffrey Burt and
                                Videonics dated February 25, 1999.

           10.12                Key Employee Agreement between James McNeill and
                                Videonics dated February 25, 1999.

           10.13                Key Employee Agreement between Gary Williams and
                                Videonics dated February 25, 1999.

           27                   Financial Data Schedule


(b)        No reports on Form 8-K were filed during the quarter  ended March 31,
           1999.


                                       13
<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.



                                                  VIDEONICS, INC.
                                                  ---------------
                                                    Registrant





                     May 13, 1999              /s/ Gary L. Williams
                     ------------              --------------------
                         Date                      Gary L. Williams

                                             Vice President of Finance,
                                              Chief Financial Officer
                                            (Chief Accounting Officer
                                               and Authorized Signer)




                                       14
<PAGE>



                                INDEX OF EXHIBITS



Exhibits:

           10.11          Key Employee  Agreement between Jeffrey Burt and
                            Videonics dated February 25, 1999..............  __

           10.12          Key Employee Agreement between James McNeill and
                            Videonics dated February 25, 1999..............  __

           10.13          Key Employee Agreement between Gary Williams and
                            Videonics dated February 25, 1999..............  __

           27.            Financial Data Schedule .........................  __






                                       15