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 June 30, 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)

       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 July 31,  1999,  there were  5,869,099  shares of the  Registrant's
Common Stock outstanding.

This quarterly report on form 10-Q,  including all exhibits,  contains 17 pages,
of which this is page 1. The exhibit index is located on page 15 of this report.


<PAGE>


                          PART I. FINANCIAL INFORMATION
<TABLE>

Item 1. Financial Statements

                                 VIDEONICS, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                    (in thousands, except per share amounts)
                                   (unaudited)
<CAPTION>

                                         Three Months Ended        Six Months Ended
                                               June 30,                June 30,
                                        --------------------    ---------------------
                                          1999        1998        1999        1998
                                        --------    --------    --------    --------

<S>                                     <C>         <C>         <C>         <C>
Net revenues                            $  3,394    $  5,907    $  7,059    $ 10,626

Cost of revenues                           1,930       3,470       4,137       6,447
                                        --------    --------    --------    --------
         Gross profit                      1,464       2,437       2,922       4,179
                                        --------    --------    --------    --------

Operating expenses:
   Research and development                  725       1,189       1,623       2,571
   Selling and marketing                   1,153       1,780       2,149       3,421
   General and administrative                392         351         766         775
                                        --------    --------    --------    --------
                                           2,270       3,320       4,538       6,767
                                        --------    --------    --------    --------
         Operating loss                     (806)       (883)     (1,616)     (2,588)

Other income (expense), net                  (15)         10         (28)          9
                                        --------    --------    --------    --------
         Loss before income
            taxes                           (821)       (873)     (1,644)     (2,579)

Benefit from income
   taxes                                    --           (32)       --           (32)
                                        --------    --------    --------    --------

         Net loss                       $   (821)   $   (841)   $ (1,644)   $ (2,547)
                                        ========    ========    ========    ========

Net loss per common share - basic
and diluted                             $  (0.14)   $  (0.14)   $  (0.28)   $  (0.44)
                                        ========    ========    ========    ========

Shares used in computing net loss per
common share - basic and diluted           5,867       5,831       5,862       5,810
                                        ========    ========    ========    ========
<FN>
                     The accompanying notes are an integral
                       part of these financial statements.
</FN>

</TABLE>

                                        2

<PAGE>

                                 VIDEONICS, INC.
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                 (in thousands)

                                                           June 30, December 31,
                                                             1999        1998
                                                           --------    --------
                                                          (unaudited)
                           ASSETS
Current assets:
   Cash and cash equivalents                               $    663    $    837
   Accounts receivable, net                                   1,115         852
   Inventories                                                4,801       5,830
   Prepaids and other current assets                             90         122
                                                           --------    --------
            Total current assets                              6,669       7,641

Property and equipment, net                                     948       1,507
Other assets                                                     44          16
                                                           --------    --------

               Total assets                                $  7,661    $  9,164
                                                           ========    ========

                        LIABILITIES

Current liabilities:
   Loan payable to shareholder                                 --      $  1,000
   Accounts payable                                        $  1,061         947
   Accrued expenses                                           1,277       1,290
                                                           --------    --------
            Total current liabilities                         2,338       3,237
                                                           --------    --------

Long term liabilities:
   Loan payable                                               1,035        --
                                                           --------    --------

            Total liabilities                                 3,373       3,237
                                                           --------    --------

   SHAREHOLDERS' EQUITY

Common stock, no par value:
   Authorized:  30,000 shares
   Issued and outstanding: 5,867 shares at
      June 30, 1999 and 5,858 shares at
      December 31, 1998                                      20,652      20,647

Accumulated deficit                                         (16,364)    (14,720)
                                                           --------    --------
            Total shareholders' equity                        4,288       5,927
                                                           --------    --------

              Total liabilities and shareholders' equity   $  7,661    $  9,164
                                                           ========    ========


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

                                        3
<PAGE>

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



                                                                Six Months Ended
                                                                     June 30,
                                                                 ---------------
                                                                  1999     1998
                                                                 -----    -----
Cash flows from operating activities:
          Net cash used in operating activities                   (216)    (495)
                                                                 -----    -----

Cash flows from investing activities:
   Proceeds from disposition                                        52     --
   Purchase of property and equipment                              (50)    (205)
                                                                 -----    -----
          Net cash provided by (used in) investing activities        2     (205)
                                                                 -----    -----

Cash flows from financing activities:
   Proceeds from issuance of loans payable to shareholder           35      619
   Repayments on loans payable to shareholder                     --        (19)
   Proceeds from issuance of common stock                            5       32
                                                                 -----    -----
          Net cash provided by financing activities                 40      632
                                                                 -----    -----

Decrease in cash and cash equivalents                             (174)     (68)

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

Cash and cash equivalents at end of period                       $ 663    $ 924
                                                                 =====    =====

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

                                        4



<PAGE>


                                 VIDEONICS, INC.
            NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


1.   The condensed  financial  statements at June 30, 1999 and for the six 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.  The results of operations  for
     this six month period ended June 30, 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):

                                                June 30,      December 31,
                                                  1999           1998
                                                 ------         ------
                                              (unaudited)
          Raw materials                          $3,921         $4,381
          Work in process                           281            375
          Finished goods                            599          1,074
                                                 ------         ------
                                                 $4,801         $5,830
                                                 ======         ======

3.       Note Payable to Shareholder:

         On April 16, 1999,  the Company  replaced a $1,000,000  unsecured  loan
         bearing interest at 8% per year and due on October 16, 1999, with a new
         loan in the amount of  $1,035,000  that bears  interest at a rate of 8%
         per year and is due on January 16, 2001.  The new loan is unsecured and
         from the same director and  significant  shareholder  of the Company as
         the previous  loan.  Accrued  interest under the new loan is payable at
         maturity.


                                       5

<PAGE>


                                 VIDEONICS, INC.
            NOTES TO THE CONDENSED CONSOLIDATED 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  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 six
         months ending June 30, (in thousands):

                                             1999              1998
                                            -------           -------
          Video Production
            Sales                           $ 6,968           $ 9,642
            Operating loss                   (1,580)           (2,425)

          Signal Processing
            Sales                                91 (1)           984
            Operating loss                      (36)(1)          (163)

         (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 CONSOLIDATED FINANCIAL STATEMENTS


6.       Comprehensive Loss

         There are no differences  between net loss for the three and six months
         ended June 30, 1998 and 1999 and the  comprehensive  loss for the these
         periods

7.       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  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 in the year 2001.


                                       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  43% in the second
quarter of 1999 compared to the second  quarter of 1998 and 34% in the first six
months of 1999 compared to the first six months of 1998. 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  40% in the second
quarter of 1999 compared to the second  quarter of 1998 and 30% in the first six
months of 1999  compared  to the first six months of 1998.  Gross  profit,  as a
percentage of net revenues, were approximately 43% in the second quarter of 1999
compared to  approximately  41% in the second quarter of 1998 and  approximately
41% in the first six months of 1999 compared to  approximately  39% in the first
six months of 1998.  The increase in gross profit as a percentage of revenues is
due primarily to a change in product mix and royalty payments.

       Research and Development. Research and development expenses decreased 39%
and 37%, respectively, between the quarterly and six-month comparison periods in
fiscal years 1998 and 1999.  The decrease was due to the Company's  sale of Nova
and a decrease in personnel.  Research and development  expenses remained fairly
consistent as a percentage of net revenues within those comparison periods.

       Selling and  Marketing.  Selling and  marketing  expenses  decreased  35%
between the second  quarter of 1998 and the second quarter of 1999 and decreased
37% between  the first six months of 1998 and the first six months of 1999.  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 increased
12%  between  the  second  quarter  of 1998 and the  second  quarter of 1999 and
decreased  1%  between  the first six months of 1998 and the first six months of
1999. The increase  between  quarterly  periods  relates  primarily to increased
personnel expenses and costs associated with the Annual Shareholders Meeting.

       Other  Income/Expense,  net.  The Company  recorded  interest  expense of
$15,000 in the second quarter of 1999 compared to interest  income of $10,000 in
the second quarter of 1998. The increase in expense is primarily due to interest
expense  calculated  on higher  borrowings  during the first six months of 1999,
only  partially  offset  by  interest  income  on cash  balances  available  for
investment.

       Benefit from Income Taxes.  During the first six months 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.  During the second quarter
of 1998 the  Company  recorded an income tax benefit of $32,000 as a result of a
state tax refund.

       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."

                                       9

<PAGE>

         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   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 June 1999,  the Company had  completed  several Year 2000  projects,
including  upgrades of its Windows NT Operating System and tape backup software,
evaluation and upgrade of its UNIX  workstations  and UNIX Operating  System for
the HP3000  hardware which supports the Company's MIS system,  evaluation of the
Company's MIS system, evaluation and upgrade of the Company's email and servers,
evaluation of network routing,  interconnect, and firewall hardware and software
compliance,  evaluation and upgrade 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 June 1999, the following Year 2000 projects are in process:  upgrade
of the MIS system software  (expected  completion is September 1999),  continued
tracking of critical vendors and  identification of any material vendor problems
(ongoing  during 1999) and  evaluation of the  Company's EDI partners  (expected
completion is October 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 June 1999, the Company's aggregate expenditures (excluding employee costs)
in  connection  with Year 2000  compliance  has been less than  $20,000  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.

                                       10
<PAGE>

       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".


Liquidity and Capital Resources

       Net cash used by operations  was $216,000 in the first six months of 1999
compared  to  $495,000  for the same  period  last  year.  The use of cash  from
operating  activities  during  the first six months of 1999 is due to a net loss
before depreciation and an increase in accounts receivable, substantially offset
by a decrease in  inventories  and an increase in accounts  payable.  The use of
cash from operating  activities during the first six months of 1998 is primarily
due to a net loss  before  depreciation,  an  increase  in  receivables,  offset
partially by a decrease in inventories  and recoverable  income taxes.  Net cash
provided by investing  activities in the first six months of 1999 was $2,000, 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  in the first six months of
1998 was  $205,000,  due to property and  equipment  expenditures  primarily for
computers,  software and engineering  equipment used in research and development
and other activities. Net cash provided by financing activities during the first
six months of 1999 was  $40,000,  primarily  due to an increase  in  shareholder
loans and the  receipt of cash from the  exercise  of the stock  options  issued
under  the  Company's  Stock  Option  Plans.  Net  cash  provided  in  financing
activities  during the first six months 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 June 30,  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.  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.

       The Company believes that its cash balances,  together with its operating
cash flows and  shareholder  borrowings will be sufficient to meet the Company's
requirements  for working  capital and capital  expenditures  through the end of
1999.

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

           10.14         Promissory Note between Carl Berg and Videonics Inc.
                         dated April 16, 1999

           27            Financial Data Schedule


(b)      No  reports on Form 8-K were filed  during the  quarter  ended June 30,
         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

                                                      August 13, 1999
                                              ----------------------------------
                                                           Date


                                          By: /s/  Gary L. Williams
                                              ----------------------------------
                                                    Gary L. Williams
                                                Vice President of Finance,
                                                 Chief Financial Officer and
                                                     Assistant Secretary
                                            (Principal Financial and Accounting
                                               Officer and Authorized Signer)




                                       14


<PAGE>

                                INDEX OF EXHIBITS



Exhibits:

10.14    Promissory Note between Carl Berg and Videonics Inc. dated
                     April 16, 1999...........................................16

27       Financial Data Schedule..............................................17





                                       15