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 September 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 October 29, 1999,  there were 5,869,099  shares of the Registrant's
Common Stock outstanding.



<PAGE>

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

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

<CAPTION>
                                                                       Three Months Ended                   Nine Months Ended
                                                                         September 30,                         September 30,
                                                                  ---------------------------           ---------------------------
                                                                    1999               1998               1999               1998
                                                                  --------           --------           --------           --------
<S>                                                               <C>                <C>                <C>                <C>
Net revenues                                                      $  3,842           $  5,025           $ 10,901           $ 15,651

Cost of revenues                                                     2,196              2,959              6,333              9,406
                                                                  --------           --------           --------           --------
         Gross profit                                                1,646              2,066              4,568              6,245
                                                                  --------           --------           --------           --------

Operating expenses:
   Research and development                                            629              1,173              2,252              3,744
   Selling and marketing                                             1,017              1,685              3,166              5,106
   General and administrative                                          245                336              1,011              1,111
                                                                  --------           --------           --------           --------
                                                                     1,891              3,194              6,429              9,961
                                                                  --------           --------           --------           --------
         Operating loss                                               (245)            (1,128)            (1,861)            (3,716)
                                                                  --------           --------           --------           --------

Other expense net                                                      (16)                (9)               (44)              --
                                                                  --------           --------           --------           --------
         Loss before income taxes                                     (261)            (1,137)            (1,905)            (3,716)

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

         Net loss                                                 $   (261)          $ (1,137)          $ (1,905)          $ (3,684)
                                                                  ========           ========           ========           ========

Net loss per common share and per
 common share - assuming dilution                                 $  (0.04)          $  (0.19)          $  (0.32)          $  (0.63)
                                                                  ========           ========           ========           ========

Shares used in computing net loss per
common share and per common share - assuming dilution                5,869              5,854              5,865              5,825
                                                                  ========           ========           ========           ========

<FN>
                                               The accompanying notes are an integral
                                                 part of these financial statements.
</FN>
</TABLE>

                                                                  2

<PAGE>

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

<CAPTION>
                                                                                                 September 30,          December 31,
                           ASSETS                                                                     1999                   1998
                                                                                                    --------               --------
                                                                                                  (unaudited)
<S>                                                                                                 <C>                    <C>
Current assets:
   Cash and cash equivalents                                                                        $    639               $    837
   Accounts receivable, net                                                                            1,162                    852
   Inventories                                                                                         4,692                  5,830
   Prepaids and other current assets                                                                     171                    122
                                                                                                    --------               --------
            Total current assets                                                                       6,664                  7,641

Property and equipment, net                                                                              705                  1,507
Other assets                                                                                              44                     16
                                                                                                    --------               --------

               Total assets                                                                         $  7,413               $  9,164
                                                                                                    ========               ========

                        LIABILITIES

Current liabilities:
   Loan payable to shareholder                                                                          --                 $  1,000
   Accounts payable                                                                                 $  1,340                    947
   Accrued expenses                                                                                      965                  1,290
                                                                                                    --------               --------
            Total current liabilities                                                                  2,305                  3,237
                                                                                                    --------               --------

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

            Total liabilities                                                                          3,340                  3,237
                                                                                                    --------               --------

   SHAREHOLDERS' EQUITY

Common stock, no par value:
   Authorized:  30,000 shares
   Issued and outstanding: 5,869 shares at
      September 30, 1999 and 5,858 shares at
      December 31, 1998                                                                               20,698                 20,647

Accumulated deficit                                                                                  (16,625)               (14,720)
                                                                                                    --------               --------
            Total shareholders' equity                                                                 4,073                  5,927
                                                                                                    --------               --------
               Total liabilities and shareholders' equity                                           $  7,413               $  9,164
                                                                                                    ========               ========

<FN>
                                               The accompanying notes are an integral
                                                 part of these financial statements.
</FN>
</TABLE>
                                                                  3
<PAGE>


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

                                                              Nine Months Ended
                                                                September 30,
                                                             ------------------
                                                              1999        1998
                                                             -------    -------
Cash flows from operating activities:
          Net cash used in operating activities                 (198)      (464)
                                                             -------    -------

Cash flows from investing activities:

   Proceeds from disposition of Nova Systems                      52       --
   Purchase of property and equipment                            (92)      (339)
                                                             -------    -------
          Net used in investing activities                       (40)      (339)
                                                             -------    -------

Cash flows from financing activities:
   Proceeds from issuance of loans payable to shareholder         35      1,019
   Repayments on loans payable to shareholder                   --          (19)
   Proceeds from issuance of common stock                          5         32
                                                             -------    -------
          Net cash provided by financing activities               40      1,032
                                                             -------    -------

Increase (decrease) in cash and cash equivalents                (198)       229

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

Cash and cash equivalents at end of period                   $   639    $ 1,221
                                                             =======    =======

                     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 September 30, 1999 and for the nine
     month period then ended for Videonics  Inc. (the  "Company")  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 nine month period
     ended September 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):

                                                    September 30,   December 31,
                                                        1999            1998
                                                        ----            ----
                                                     (unaudited)

     Raw materials                                     $3,859             $4,381
     Work in process                                      548                375
     Finished goods                                       285              1,074
                                                       ------             ------
                                                       $4,692             $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  bearing  interest at a rate of 8% per year and 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 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 sale of 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,  the Company  wrote off $1.9 million of  intangibles
     related to Nova. The sale of Nova may provide the Company 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 was sold on January
     29, 1999.

     The table below presents  information  about reported segments for the nine
     months ending September 30, 1999 and 1998 (in thousands):

                                                  1999                  1998
                                                  ----                  ----
     Video Production
       Sales                                    $ 10,810               $ 14,165
       Operating loss                             (1,825)                (3,512)

     Signal Processing
       Sales                                          91 (1)              1,486
       Operating loss                                (36)(1)               (204)

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

                                       6
<PAGE>

                                 VIDEONICS, INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


6.   Line of Credit

     In August 1999,  the Company  obtained a $1.0  million  asset based line of
     credit from Venture  Banking Group, a division of Cupertino  National Bank,
     secured  by  the  Company's  assets.  Interest  on  any  advances  will  be
     calculated at a rate of 1.5% above prime. The Company is subject to various
     covenants. The revolving maturity date of this facility is August 25, 2001.
     In  connection  with this  agreement the Company has agreed to issue 95,000
     warrants  to purchase  common  stock to the bank,  at an exercise  price of
     $0.65.  These warrants expire on September 15, 2002. The Company recognized
     $46,000 as prepaid  financing  costs related to these  warrants  during the
     quarter ended  September  1999. This amount will be amortized over the term
     of the loan.  As of the date of this  filing,  the Company had not borrowed
     from this facility.

7.   Comprehensive Loss

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

8.   Recent Accounting Pronouncement:

     In June of 1999, 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 24% in the third quarter
of 1999  compared to the third  quarter of 1998 and  decreased  30% in the first
nine months of 1999  compared to the first nine months of 1998.  The decrease in
revenue was due in part to the sale of the Company's  Nova  Division,  decreased
sales of the Company's  older  videographer  products and decreased sales of the
Company's  Effetto  Pronto  product, offset  partially  by sales of the  MXProDV
product which was introduced in late August, 1999.

     Gross Profit. Gross profit decreased approximately 20% in the third quarter
of 1999  compared to the third  quarter of 1998 and  decreased  27% in the first
nine months of 1999 compared to the first nine months of 1998. Gross profit,  as
a percentage of net revenues, was approximately 43% in the third quarter of 1999
compared to approximately 41% in the third quarter of 1998 and approximately 42%
in the first nine months of 1999 compared to approximately 40% in the first nine
months of 1998.  The  increase  as a  percentage  of sales  between  periods  is
primarily due to a change in product mix and slightly  higher margins on MXProDV
sales.

     Research and Development.  Research and development  expenses decreased 46%
and 40%,  respectively,  between the quarterly and nine month comparison periods
in fiscal years 1998 and 1999.  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 40% between
the third  quarter  of 1998 and the third  quarter of 1999 and 38%  between  the
first nine months of 1998 and the first nine months of 1999.  The  decrease  was
primarily due to the Company's sale of Nova, a decrease in personnel and reduced
advertising  expenses.  Included in expenses  for the third  quarter of 1999 was
approximately $52,000 of closing costs associated with the sale of the Company's
German  subsidiary.  Revenue and assets employed by the Company's German office,
were not  material to the  consolidated

                                       8
<PAGE>

financial  statements.  On a go forward  basis,  the Company will utilize  local
distribution to market and sell its products as it does throughout Europe.

     General and Administrative.  General and administrative  expenses decreased
27% between the third  quarter of 1998 and third  quarter of 1999  decreased  9%
between the nine month  comparison  periods in fiscal  years 1998 and 1999.  The
decrease between  quarterly  periods is primarily due to a decrease in personnel
and the timing of certain  general and  administrative  expenses.  The  decrease
between nine month comparison periods is due to a decrease in personnel.

     Other Expense, net. The Company recorded net interest expense of $16,000 in
the third  quarter of 1999  compared  to net  interest  expense of $9,000 in the
third  quarter of 1998.  The  increase in expense is  primarily  due to interest
expense incurred on higher borrowings during the nine months ended September 30,
1999.

     Benefit from Income Taxes.  No tax benefit was recognized on this quarter's
loss.  During the nine  months  ended  September  30 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 first nine months of 1998, the
Company  recorded  a tax  benefit  totaling  $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

                                       9
<PAGE>

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 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 October,  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  and
upgrade 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 October  1999,  the  following  Year 2000  projects  are in  process:
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 November 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  October  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  $198,000  for the  nine  months  ended
September  30, 1999  compared to net cash used in operations of $464,000 for the
same period in 1998. The use of cash from operating  activities during the first
nine  months of 1999 is  primarily  due to a net loss  before  depreciation,  an
increase in accounts receivable, offset partially by a decrease in inventory and
an increase in accounts payable.  The decrease in cash from operating activities
during the nine months ended  September  30, 1998 is primarily due to a net loss
before  depreciation,   offset  partially  by  a  decrease  in  inventories  and
recoverable  income taxes.  Net cash used by investing  activities for the first
nine months  ended  September  30,  1999 was  $40,000,  as the Company  received
$52,000 in  connection  with the sale of Nova,  offset 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 nine months ended September 30, 1998 was $339,000, due to the
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 nine  months  of 1999 was
$40,000,  primarily  due to the  receipt of cash from the  exercise of the stock
options  issued  under the  Company's  Stock  Option  Plans and an  increase  in
shareholder  loans. Net cash provided by financing  activities  during the first
nine months of 1998 was $1.0 million, primarily because of shareholder loans 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  September  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.  The Company is developing and expects to release a next
generation  product for its core Video  Production  segment  early in 2000.  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.

     As described in the notes to the  consolidated  financial  statements,  the
Company has  obtained a $1.0  million  asset  based line of credit from  Venture
Banking Group, a division of Cupertino  National Bank, secured  by the Company's
assets.  Interest on any  advances  will be  calculated  at a rate of 1.5% above
prime. The Company is subject to various covenants.  The revolving maturity date
of this facility is August 25, 2001. As of the date of this filing,  the Company
had not borrowed from this facility.

                                       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 2. Changes in Securities and Use of Proceeds

(c) Effective September 15, 1999, the Company issued a warrant for 95,000 shares
of Common  Stock  (the  "Warrant")  to Venture  Banking  Group,  a  division  of
Cupertino  National  Bank, in connection  with a line of credit  provided to the
Company.  The Warrant  expires on  September  15, 2002 and is  convertible  into
Common  Stock at any time prior to such date at an  exercise  price of $0.65 per
share. The Warrant was issued pursuant to the exemption provided by Section 4(2)
of the Securities Act of 1933, as amended.  The holder of shares of Common Stock
issued upon  exercise of the Warrant is entitled to  registration  rights as set
forth in the Holders Rights Agreement.

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

     At the Annual  Meeting of  Shareholders  on July 15,  1999,  the  following
persons were elected to the Board of Directors:

                                                                Votes
                               Affirmative            --------------------------
                                  Votes               Withheld         Abstained
                                  -----               --------         ---------
Michael L. D'Addio              5,194,468              73,055              0
B. Yeshwant Kamath*             5,190,668              76,855              0
Mark C. Hahn                    5,200,468              67,055              0
Carl E. Berg                    5,200,268              67,255              0
N. William Jasper, Jr.          5,201,218              66,305              0


* Mr. Kamath the Company's  President and Director passed away on July 11, 1999.
As such,  the Company will have one vacancy on the Board.  This seat will remain
open until such time the present Board of Directors decides to fill the vacancy.


There were 5,267,523 shares of Common Stock represented at the meeting.

The following proposals were approved at the Company's Annual Meeting:

                                                                Votes
                               Affirmative            --------------------------
                                  Votes               Withheld         Abstained
                                  -----               --------         ---------

To approve an amendment to
the Company's Restated
Articles of Incorporation to
effect a stock combination
(reverse stock split)
pursuant to which every three
(3) shares of the Company's
outstanding Common Stock
would be exchanged for one
(1) new share of Common
Stock.                          5,144,628             107,282         15,613

                                       13
<PAGE>

To ratify the appointment of
PricewaterhouseCoopers L.L.P.
as the independent
accountants of the Company
for the fiscal year ending
December 31, 1999.              5,216,541              38,332         12,650



Item 6.    Exhibits and Reports on Form 8-K

(a)        Exhibits

           Exhibit No.           Description of Document
           -----------           -----------------------
              4.01               Warrant to Purchase Stock.

              4.02               Holder Rights Agreement.

             10.15               Loan and Security Agreement.

             10.16               Intellectual Property Security Agreement.

             10.17               Subordination Agreement.

             27.1                Financial Data Schedule.


(b) No reports on Form 8-K were filed  during the quarter  ended  September  30,
1999.

                                       14
<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.


November 12, 1999                                      VIDEONICS, INC.
-----------------                                   --------------------
     Date                                                Registrant



                                                   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)

                                       15
<PAGE>

                                INDEX OF EXHIBITS



Exhibits:

          4.01        Warrant to Purchase Stock

          4.02        Holder Rights Agreement

         10.15        Loan and Security Agreement

         10.16        Intellectual Property Security Agreement

         10.17        Subordination Agreement

         27.1         Financial Data Schedule

                                       16