##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 Form 10-QSB
  þ
    
    QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the quarterly period ended September 30, 2007
 o
    
    TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
 For the transition period from  to
 Commission File Number: 0-29020
 ViewCast.com, Inc.
 
 Delaware
    
    75-2528700(State or other Jurisdiction of 
Incorporation or Organization)
    
    (I.R.S. Employer Incorporation
Identification No.)
 3701 W. Plano Parkway, Suite 300, Plano, TX 75075
 
 972/488-7200
 
 þ o
 o þ
 APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
 o o
 APPLICABLE ONLY TO CORPORATE ISSUERS
  o þ




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##### 



ViewCast.com, Inc. and Subsidiaries
Index to Form 10-QSB
 PART I. FINANCIAL INFORMATIONItem 1. Financial StatementsCondensed Consolidated Balance Sheets at December 31, 2006 and September 30,
2007 (Unaudited)
    
    
    3Condensed Consolidated Statements of Operations for the Three and Nine Months
ended September 30, 2006 and 2007 (Unaudited)
    
    
    4Condensed Consolidated Statement of Stockholders Deficit for the Nine Months
ended September 30, 2007 (Unaudited)
    
    
    5Condensed Consolidated Statements of Cash Flows for the Nine Months
ended September 30, 2006 and 2007 (Unaudited)
    
    
    6Notes to Condensed Consolidated Financial Statements
    
    
    7Item 2. Managements Discussion and Analysis
    
    
    14Item 3. Controls and Procedures
    
    
    19PART II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    20Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    20Item 3. Defaults Upon Senior Securities
    
    
    20Item 4. Submission of Matters to a Vote of Security Holders
    
    
    20Item 5. Other Information
    
    
    20Item 6. Exhibits
    
    
    20SIGNATURES
    
    
    21Rule 13a-14(a)/15d-14(a) CEO CertificationRule 13a-14(a)/15d-14(a) CFO CertificationSection 1350 CEO CertificationSection 1350 CFO Certification
  2




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VIEWCAST.COM, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
 December 31,
    
    
    September 30,2006
    
    
    2007(Unaudited)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    567,509
    
    
    $
    398,501Accounts receivable, less allowance for doubtful
accounts of $30,756 and $69,100 at December 31, 2006 and
September 30, 2007, respectively
    
    
    2,084,723
    
    
    
    1,620,154Inventories, net
    
    
    2,155,212
    
    
    
    2,984,199Prepaid expenses
    
    
    148,039
    
    
    
    273,881Total current assets
    
    
    4,955,483
    
    
    
    5,276,735Property and equipment, net
    
    
    446,758
    
    
    
    795,333Intangible assets, net
    
    
    177,737
    
    
    
    273,198Deposits
    
    
    59,107
    
    
    
    71,204Total assets
    
    $
    5,639,085
    
    
    $
    6,416,470LIABILITIES AND STOCKHOLDERS DEFICITCurrent liabilities:Accounts payable
    
    $
    982,472
    
    
    $
    645,700Accrued expenses
    
    
    1,020,535
    
    
    
    908,663Current maturities of long-term debt
    
    
    2,807
    
    
    
    6,793Total current liabilities
    
    
    2,005,814
    
    
    
    1,561,156Long-term debt, less current maturities
    
    
    491
    
    
    
    48,119Stockholder note payable
    
    
    5,141,361
    
    
    
    5,141,361Stockholder accrued interest
    
    
    10,561
    
    
    
    145,755Commitments and contingenciesStockholders deficit:Preferred stock, $0.0001 par value, authorized 5,000,000 shares:Series B
convertible  issued and outstanding shares  800,000
    
    
    80
    
    
    
    80Series C
convertible  issued and outstanding shares  200,000
    
    
    20
    
    
    
    20Series E
convertible  issued and outstanding shares  80,000
    
    
    8
    
    
    
    8Common stock, $.0001 par value, authorized 100,000,000 shares:Issued
shares   28,752,143 and 32,341,753 at December 31, 2006 and
September 30, 2007, respectively
    
    
    2,875
    
    
    
    3,234Additional paid-in capital
    
    
    68,986,065
    
    
    
    69,968,947Accumulated deficit
    
    
    (70,496,284
    )
    
    
    (70,440,304
    )Treasury stock, 261,497 shares at cost
    
    
    (11,906
    )
    
    
    (11,906
    )Total stockholders deficit
    
    
    (1,519,142
    )
    
    
    (479,921
    )Total liabilities and stockholders deficit
    
    $
    5,639,085
    
    
    $
    6,416,470
  3




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VIEWCAST.COM, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
 For the three months ended
    
    
    For the nine months endedSeptember 30,
    
    
    September 30,2006
    
    
    2007
    
    
    2006
    
    
    2007Net sales
    
    $
    3,299,321
    
    
    $
    4,094,062
    
    
    $
    9,740,754
    
    
    $
    11,502,918Cost of sales
    
    
    1,488,493
    
    
    
    1,792,269
    
    
    
    4,376,698
    
    
    
    4,863,589Gross profit
    
    
    1,810,828
    
    
    
    2,301,793
    
    
    
    5,364,056
    
    
    
    6,639,329Operating expenses:Selling, general and
administrative
    
    
    1,493,002
    
    
    
    1,678,922
    
    
    
    4,811,627
    
    
    
    4,792,774Research and development
    
    
    417,707
    
    
    
    596,291
    
    
    
    1,523,181
    
    
    
    1,572,792Depreciation and amortization
    
    
    72,293
    
    
    
    104,984
    
    
    
    197,070
    
    
    
    264,139Total operating expenses
    
    
    1,983,002
    
    
    
    2,380,197
    
    
    
    6,531,878
    
    
    
    6,629,705Operating income (loss)
    
    
    (172,174
    )
    
    
    (78,404
    )
    
    
    (1,167,822
    )
    
    
    9,624Other income (expense):Interest expense, net
(including $244,997,
$74,451, $727,001 and
$221,439 to related parties,
respectively)
    
    
    (239,468
    )
    
    
    (79,118
    )
    
    
    (710,856
    )
    
    
    (203,644
    )Other income (expense)
    
    
    (5,008
    )
    
    
    
    
    
    
    (13,588
    )
    
    
    250,000Total other income (expense)
    
    
    (244,476
    )
    
    
    (79,118
    )
    
    
    (724,444
    )
    
    
    46,356Income tax expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    NET INCOME (LOSS)
    
    $
    (416,650
    )
    
    $
    (157,522
    )
    
    $
    (1,892,266
    )
    
    $
    55,980Preferred stock dividends
    
    
    (206,494
    )
    
    
    (206,494
    )
    
    
    (612,749
    )
    
    
    (612,749
    )Net loss applicable to
common stockholders
    
    $
    (623,144
    )
    
    $
    (364,016
    )
    
    $
    (2,505,015
    )
    
    $
    (556,769
    )Net loss per share  basic
and diluted
    
    $
    (0.02
    )
    
    $
    (0.01
    )
    
    $
    (0.10
    )
    
    $
    (0.02
    )Weighted average number of
common shares
outstanding  basic and
diluted
    
    
    25,627,959
    
    
    
    32,065,582
    
    
    
    25,627,959
    
    
    
    31,591,058
  4




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VIEWCAST.COM, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS DEFICIT
 FOR THE NINE MONTHS
ENDED SEPTEMBER 30, 2007 (UNAUDITED)
 Series B
    
    
    Series C
    
    
    Series EConvertible
    
    
    Convertible
    
    
    Convertible
    
    
    
    
    
    
    
    
    
    
    Additional
    
    
    
    
    
    
    
    
    
    
    TotalPreferred Stock
    
    
    Preferred Stock
    
    
    Preferred Stock
    
    
    Common Stock
    
    
    Paid-in
    
    
    Accumulated
    
    
    Treasury
    
    
    StockholdersShares
    
    
    Par Value
    
    
    Shares
    
    
    Par Value
    
    
    Shares
    
    
    Par Value
    
    
    Shares
    
    
    Par Value
    
    
    Capital
    
    
    Deficit
    
    
    Stock
    
    
    DeficitBalances, December 31, 2006
    
    
    800,000
    
    
    $
    80
    
    
    
    200,000
    
    
    $
    20
    
    
    
    80,000
    
    
    $
    8
    
    
    
    28,752,143
    
    
    $
    2,875
    
    
    $
    68,986,065
    
    
    $
    (70,496,284
    )
    
    $
    (11,906
    )
    
    $
    (1,519,142
    )Stock based compensation expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    29,862
    
    
    
    
    
    
    
    
    
    
    
    29,862Exercise of stock options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    55,000
    
    
    
    6
    
    
    
    16,940
    
    
    
    
    
    
    
    
    
    
    
    16,946Exercise of stock warrants
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,534,610
    
    
    
    353
    
    
    
    936,080
    
    
    
    
    
    
    
    
    
    
    
    936,433Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    55,980
    
    
    
    
    
    
    
    55,980Balances, September 30, 2007
    
    
    800,000
    
    
    $
    80
    
    
    
    200,000
    
    
    $
    20
    
    
    
    80,000
    
    
    $
    8
    
    
    
    32,341,753
    
    
    $
    3,234
    
    
    $
    69,968,947
    
    
    $
    (70,440,304
    )
    
    $
    (11,906
    )
    
    $
    (479,921
    )
  5




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VIEWCAST.COM, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (UNAUDITED)
 For the nine months endedSeptember 30,2006
    
    
    2007Operating activities:Net income (loss)
    
    $
    (1,892,266
    )
    
    $
    55,980Adjustments to reconcile net income (loss) to net cash
used in operating activities:Bad debt expense
    
    
    27,585
    
    
    
    38,344Depreciation of property and equipment
    
    
    141,329
    
    
    
    221,839Amortization of software development costs
    
    
    55,741
    
    
    
    42,300Stock based compensation expense
    
    
    4,838
    
    
    
    29,862Loss on disposition of property and equipment
    
    
    16,930
    
    
    
    Changes in operating assets and liabilitiesAccounts receivable
    
    
    (17,163
    )
    
    
    426,226Inventories
    
    
    (65,237
    )
    
    
    (828,987
    )Prepaid expenses
    
    
    (90,045
    )
    
    
    (125,842
    )Deposits
    
    
    (15,540
    )
    
    
    (12,097
    )Accounts payable
    
    
    417,240
    
    
    
    (336,772
    )Accrued expenses
    
    
    991,062
    
    
    
    (111,872
    )Stockholder accrued interest
    
    
    150,436
    
    
    
    135,194Net cash used in operating activities
    
    
    (275,090
    )
    
    
    (465,825
    )Investing activities:Capitalized software development costs
    
    
    (179,593
    )
    
    
    (137,761
    )Purchase of property and equipment
    
    
    (339,533
    )
    
    
    (510,704
    )Net cash used in investing activities
    
    
    (519,126
    )
    
    
    (648,465
    )Financing activities:Proceeds from exercise of stock options
    
    
    
    
    
    
    16,946Net proceeds from exercise of warrants
    
    
    
    
    
    
    936,433Repayments of long-term debt
    
    
    (5,837
    )
    
    
    (8,097
    )Net cash provided by (used in) financing activities
    
    
    (5,837
    )
    
    
    945,282Net decrease in cash and cash equivalents
    
    
    (800,053
    )
    
    
    (169,008
    )Cash and cash equivalents, beginning of period
    
    
    1,447,873
    
    
    
    567,509Cash and cash equivalents, end of period
    
    $
    647,820
    
    
    $
    398,501Supplemental cash flow information:Cash paid for interest
    
    $
    1,558
    
    
    $
    91,498Non cash investing and financing activities:Property and equipment acquired with capital lease
    
    $
    
    
    
    $
    59,710
  6




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ViewCast.com, Inc. and Subsidiaries
 
 Notes to Condensed Consolidated Financial Statements
 1. Basis of Presentation
     2. Accounts Receivable
  7




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##### Table of Contents



ViewCast.com, Inc. and Subsidiaries
Notes to the Consolidated Financial Statements  Continued
  For the three months ended
    
    
    For the nine months endedSeptember 30,
    
    
    September 30,2006
    
    
    2007
    
    
    2006
    
    
    2007(Unaudited)
    
    
    (Unaudited)
    
    
    (Unaudited)
    
    
    (Unaudited)Beginning balance
    
    $
    33,982
    
    
    $
    55,405
    
    
    $
    13,171
    
    
    $
    30,756Bad debt expense
    
    
    6,774
    
    
    
    13,695
    
    
    
    27,585
    
    
    
    38,344Ending balance
    
    $
    40,756
    
    
    $
    69,100
    
    
    $
    40,756
    
    
    $
    69,100
 3. Inventories
  December 31,
    
    
    September 30,2006
    
    
    2007(Unaudited)Purchased materials
    
    $
    1,410,411
    
    
    $
    2,001,405Finished goods
    
    
    744,801
    
    
    
    982,794$
    2,155,212
    
    
    $
    2,984,199
 4. Accrued Expenses
  December 31,
    
    
    September 30,2006
    
    
    2007(Unaudited)Accrued compensation
    
    $
    217,445
    
    
    $
    254,480Accrued warranty
    
    
    117,636
    
    
    
    119,694Accrued inventory purchases
    
    
    95,068
    
    
    
    36,918Customer deposits
    
    
    166,844
    
    
    
    61,934Deferred rent
    
    
    118,496
    
    
    
    112,225Deferred revenue
    
    
    71,857
    
    
    
    91,024Accrued taxes and other
    
    
    233,189
    
    
    
    232,388$
    1,020,535
    
    
    $
    908,663
 8




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ViewCast.com, Inc. and Subsidiaries
Notes to the Consolidated Financial Statements  Continued
 5. Warranty Reserves
   For the three months ended
    
    
    For the nine months endedSeptember 30,
    
    
    September 30,2006
    
    
    2007
    
    
    2006
    
    
    2007(Unaudited)
    
    
    (Unaudited)
    
    
    (Unaudited)
    
    
    (Unaudited)Beginning balance
    
    $
    63,399
    
    
    $
    90,154
    
    
    $
    57,667
    
    
    $
    117,636Charged to expense
    
    
    15,224
    
    
    
    33,380
    
    
    
    44,669
    
    
    
    118,625Usage
    
    
    (22,891
    )
    
    
    (3,840
    )
    
    
    (46,604
    )
    
    
    (116,567
    )Ending balance
    
    $
    55,732
    
    
    $
    119,694
    
    
    $
    55,732
    
    
    $
    119,694
 6. Property and Equipment
  EstimatedUseful Life
    
    
    December 31,
    
    
    September 30,(Years)
    
    
    2006
    
    
    2007(Unaudited)Computer equipment
    
    
    3 to 7
    
    
    $
    408,174
    
    
    $
    599,609Service equipment and components
    
    
    3
    
    
    
    
    
    
    
    242,362Software
    
    
    3 to 5
    
    
    
    132,909
    
    
    
    182,110Leasehold improvements
    
    
    1 to 5
    
    
    
    121,746
    
    
    
    130,409Office furniture and equipment
    
    
    5 to 7
    
    
    
    604,768
    
    
    
    680,3001,267,597
    
    
    
    1,834,790Less accumulated depreciation and
amortization
    
    
    
    
    
    
    (820,839
    )
    
    
    (1,039,457
    )$
    446,758
    
    
    $
    795,333
 7. Stockholder Term Note
  9




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ViewCast.com, Inc. and Subsidiaries
Notes to the Consolidated Financial Statements  Continued
  December 31, 2006
    
    
    September 30, 2007(Unaudited)Aggregate of the Outstanding Principal (Primary Principal
Amount), with interest due monthly at a rate per annum equal to
the lesser of prime plus 1.0% (8.25% and 7.75% at December 31,
2006 and September 30, 2007, respectively) or 9.5% fixed rate,
due December 31, 2009.
    
    
    1,250,000
    
    
    
    1,250,000Accrued and Outstanding Interest (Secondary Principal
Amount), with interest due at maturity at a rate per annum equal
to the lesser of Applicable Federal Rate (4.73% and 4.82% at
December 31, 2006 and September 30, 2007, respectively) or
9.5% fixed rate, due December 31, 2009.
    
    
    3,891,361
    
    
    
    3,891,361Other long-term debt
    
    
    3,298
    
    
    
    54,912Total long-term debt
    
    
    5,144,659
    
    
    
    5,196,273Less current maturities
    
    
    (2,807
    )
    
    
    (6,793
    )Total long-term debt less current maturities
    
    $
    5,141,852
    
    
    $
    5,189,480
 8. Warrants
   WarrantsWeighted-Number
    
    
    Exercise
    
    
    Averageof Warrants
    
    
    Price
    
    
    Exercise PriceOutstanding and exercisable
at December 31, 2006
    
    
    6,983,982
    
    
    $
    0.281.00
    
    
    $
    0.37Granted
    
    
    
    
    
    
    
    
    
    
    Exercised
    
    
    (3,534,610
    )
    
    
    0.28
    
    
    
    0.28Cancelled
    
    
    (949,372
    )
    
    
    0.28  1.00
    
    
    
    0.42Outstanding and exercisable
at September 30, 2007
    
    
    2,500,000
    
    
    $
    0.48
    
    
    $
    0.48
  10




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ViewCast.com, Inc. and Subsidiaries
Notes to the Consolidated Financial Statements  Continued
 9. Net loss Per Share Data
   For
the Three Months Ended September 30,
    

For
the Nine Months Ended September 30,2006
    
    2007
    
    2006
    
    2007(Unaudited)
    
    (Unaudited)
    
    (Unaudited)
    
    (Unaudited)Stock options
    
    
    2,625,775
    
    
    
    2,984,850
    
    
    
    2,790,975
    
    
    
    2,732,225Public and private warrants
    
    
    4,746,482
    
    
    
    2,500,000
    
    
    
    4,746,482
    
    
    
    3,224,363Convertible preferred stock  Series B
    
    
    2,206,896
    
    
    
    2,206,896
    
    
    
    2,206,896
    
    
    
    2,206,896Convertible preferred stock  Series C
    
    
    3,333,333
    
    
    
    3,333,333
    
    
    
    3,333,333
    
    
    
    3,333,333Convertible preferred stock  Series E
    
    
    
    
    
    
    15,686,274
    
    
    
    
    
    
    
    15,686,27412,912,486
    
    
    
    26,711,353
    
    
    
    13,077,686
    
    
    
    27,183,091
 10. Stock-Based Compensation
      11




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ViewCast.com, Inc. and Subsidiaries
Notes to the Consolidated Financial Statements  Continued
  Nine months endedSeptember 30,2007Expected volatility
    
    
    106.42%  107.46
    %Risk-free interest rate
    
    
    4.68%  4.72
    %Expected dividends
    
    
    0.0
    %Expected term in years
    
    
    4.04  4.12
   Stock OptionsWeighted-AverageNumber
    
    
    Price Per
    
    
    Exercise Priceof Shares
    
    
    Share
    
    
    Per ShareOutstanding at January 1, 2007
    
    
    2,534,600
    
    
    $
    0.20$9.00
    
    
    $
    2.20Granted
    
    
    1,320,000
    
    
    
    0.39  0.46
    
    
    
    0.43Exercised
    
    
    (55,000
    )
    
    
    0.29  0.41
    
    
    
    0.31Canceled/forfeited
    
    
    (257,750
    )
    
    
    0.20  9.00
    
    
    
    1.45Outstanding at September 30, 2007
    
    
    3,541,850
    
    
    $
    0.20$7.14
    
    
    $
    1.63
  Weighted-Average
    
    Weighted-
    
    
    
    
    
    Weighted-Range of
    
    Outstanding at
    
    Remaining
    
    Average
    
    Exercisable at
    
    AverageExercise
    
    September 30,
    
    Contractual
    
    Exercise
    
    September 30,
    
    ExercisePrices
    
    2007
    
    Life
    
    Price
    
    2007
    
    Price$0.01  $1.00
    
    
    2,258,000
    
    
    
    6.6
    
    
    $
    0.41
    
    
    
    843,968
    
    
    $
    0.401.01  2.00
    
    
    541,850
    
    
    
    3.4
    
    
    
    1.12
    
    
    
    541,850
    
    
    
    1.122.01  3.00
    
    
    110,000
    
    
    
    2.3
    
    
    
    2.51
    
    
    
    110,000
    
    
    
    2.513.01  4.00
    
    
    67,500
    
    
    
    1.2
    
    
    
    3.50
    
    
    
    67,500
    
    
    
    3.504.01  5.00
    
    
    36,500
    
    
    
    0.8
    
    
    
    4.20
    
    
    
    36,500
    
    
    
    4.205.01  6.00
    
    
    116,000
    
    
    
    2.2
    
    
    
    5.50
    
    
    
    116,000
    
    
    
    5.506.01  7.00
    
    
    2,000
    
    
    
    1.5
    
    
    
    7.00
    
    
    
    2,000
    
    
    
    7.007.01  8.00
    
    
    410,000
    
    
    
    2.0
    
    
    
    7.10
    
    
    
    260,000
    
    
    
    7.103,541,850
    
    
    
    5.2
    
    
    $
    1.63
    
    
    
    1,977,818
    
    
    $
    2.08
 12




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##### Table of Contents



ViewCast.com, Inc. and Subsidiaries
Notes to the Consolidated Financial Statements  Continued
 11. Other Income
  12. Income Taxes
   13. Related Party Transactions
   14. Accounts Receivable Loan Facility
  15. Preferred Stock Dividend
  13




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##### Table of Contents



ViewCast.com, Inc. and Subsidiaries
Managements Discussion and Analysis or Plan of Operation
 
 Item 2. Managements Discussion and Analysis
    Overview
 ® ®
  Critical Accounting Policies
  14




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##### Table of Contents



ViewCast.com, Inc. and Subsidiaries
Managements Discussion and Analysis or
Plan of Operation  Continued
  
    
    Revenue Recognition We apply provisions of Securities and Exchange Commission
Staff Accounting Bulletin (SAB) No. 101, Revenue Recognition in Financial Statements as
revised by SAB 104, Revenue Recognition, SOP 97-2, Software Revenue Recognition, as
amended by SOP 98-9, Modification of SOP 97-2, Software Revenue Recognition, with
Respect to Certain Transactions and EITF 00-21, Revenue Arrangements with Multiple
Deliverables to transactions involving sales of our hardware and software products.
Under these guidelines, we recognize revenue on transactions where persuasive evidence
of an arrangement exists, title has transferred, product payment is not contingent upon
performance of installation or service obligations, the price is fixed or determinable
and payment is reasonably assured. We accrue warranty costs and sales allowances for
promotional activities at time of shipment based on historical experience. In
addition, we defer revenue associated with maintenance and support contracts and
recognize revenue ratably over the contract term.
    
    Allowance for Doubtful Accounts We maintain allowances for doubtful accounts for
estimated losses resulting from the inability of our customers to make required
payments. If the financial condition of our customers or distribution partners were to
deteriorate, resulting in an impairment of their ability to make payments, additional
allowances may be required.
    
    Excess and Obsolete Inventories We write down our inventories for estimated
obsolescence and unmarketable inventory equal to the difference between the cost of the
inventory and the estimated market value based upon assumptions about future demand and
market conditions. If actual market conditions are less than those projected by
management, additional write-downs may be required.
    
    Deferred Taxes We record a valuation allowance to reduce our deferred tax assets
to an amount that we believe is more likely than not to be realized. In our opinion,
realization of our net operating loss carryforward is not reasonably assured, and a
valuation allowance has been provided against deferred tax assets in excess of deferred
tax liabilities in the accompanying consolidated financial statements. However, should
we in the future determine that realization of deferred tax assets in excess of
recorded amounts is likely, an adjustment to the deferred tax assets would increase
income in the period such determination was made.
 15




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##### Table of Contents



ViewCast.com, Inc. and Subsidiaries
Managements Discussion and Analysis or
Plan of Operation  Continued
 Results of Operations
 Three and Nine Months Ended September 30, 2007 compared to
Three and Nine Months Ended September 30, 2006.
 Net Sales .
 ViewCast Niagara® Streaming Encoding System Sales.
 ® ® ®
 Osprey Product Sales .
 ®
  Other Revenues .
 Cost of Sales and Gross Margins .
 16




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##### Table of Contents



ViewCast.com, Inc. and Subsidiaries
Managements Discussion and Analysis or
Plan of Operation  Continued
  Selling, General and Administrative Expense .
 Research and Development Expense.
 Other Income (Expense)
 Liquidity and Capital Resources
      17




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##### Table of Contents



ViewCast.com, Inc. and Subsidiaries
Managements Discussion and Analysis or
Plan of Operation  Continued
        Off-Balance Sheet Arrangements
  18




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##### Table of Contents



ViewCast.com, Inc. and Subsidiaries
Controls and Procedures
 
 Item 3. Controls and Procedures
   19




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##### Table of Contents



ViewCast.com, Inc. and Subsidiaries
Other Information
 
 PART II: OTHER INFORMATION
 
   
   
   
   1.
    
    Election of directors for one-year terms.
 Number of Votes
    
    Number of Votes
    
    BrokerNominees
    
    Number of Votes For
    
    Against
    
    Abstaining
    
    Non-VotesGeorge C. Platt
    
    
    42,831,849
    
    
    
    540,085
    
    
    
    1
    
    
    
    2,191,774Joseph Autem
    
    
    42,849,549
    
    
    
    522,385
    
    
    
    1
    
    
    
    2,191,774Sherel Horsley
    
    
    42,849,549
    
    
    
    522,385
    
    
    
    1
    
    
    
    2,191,774John Slocum, Jr.
    
    
    42,842,149
    
    
    
    529,785
    
    
    
    1
    
    
    
    2,191,774
 2.
    
    Ratification of KBA Group LLP as the Companys independent registered public
accountants for the fiscal year 2007.
 Number of Votes
    
    Number of Votes
    
    BrokerNumber of Votes For
    
    Against
    
    Abstaining
    
    Non-Votes43,336,455
    
    
    32,980
    
    
    
    2,500
    
    
    
    2,191,774
 
    
   20




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##### Table of Contents



SIGNATURES
  ViewCast.com, Inc.
(Registrant)Date: November 14, 2007
    BY:
    /s/ George C. PlattGeorge C. PlattChief Executive Officer
Principal Executive Officer/s/ Laurie L. LathamLaurie L. LathamChief Financial Officer
Principal Financial and Accounting Officer 21




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##### Table of Contents



EXHIBIT INDEX
 ExhibitPage No.
    
    Description of Exhibit10.40
    
    Purchase and Sale Agreement/Security Agreement by and among ViewCast.com, Inc.,
Osprey Technologies, Inc., Videoware, Inc. and Amegy Bank National Association, dated June
29, 2007. (1)10.41
    
    Amendment to Purchase and Sale Agreement/Security Agreement by and among
ViewCast.com, Inc., Osprey Technologies, Inc., Videoware, Inc. and Amegy Bank National
Association, dated June 29, 2007. (1)31.1
    
    Rule 13a-14(a)/15d-14(a) CEO Certification*31.2
    
    Rule 13a-14(a)/15d-14(a) CFO Certification*32.1
    
    Section 1350 CEO Certification*32.2
    
    Section 1350 CFO Certification*
 
 (1)
    
    Incorporated by reference to Form 8-K filed July 6, 2007.*
    
    Filed herewith. 22