##### Table of Contents



United States
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended: March 31, 2009
 OR
 o
    
    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: 000-29020
 ViewCast.com, Inc.
 (Exact name of registrant as specified in its charter)
 Delaware
    
    75-2528700(State or other jurisdiction of incorporation or organization)
    
    (I.R.S. Employer Identification No.)3701 W. Plano Parkway, Suite 300, Plano, TX
    
    75075(Address of principal executive offices)
    
    (Zip Code)
 (972) 488-7200
 (Registrants telephone number including area code)
 N/A
 (Former name, former address and former fiscal year, if changed from last report)
 Yes þ No o
 Yes o No þ
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company þ
 Yes o No þ
  As of April 30, 2009, there were 35,822,230 shares of common stock, par value $0.0001 per share.




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##### 



TABLE OF CONTENTS
 PART I. FINANCIAL INFORMATIONItem 1. Financial StatementsCondensed Consolidated Balance Sheets at December 31, 2008 and March 31, 2009
(Unaudited)
    
    
    3Condensed Consolidated Statements of Operations for the Three Months
ended March 31, 2008 and 2009 (Unaudited)
    
    
    4Condensed Consolidated Statement of Stockholders Equity for the Three Months
ended March 31, 2009 (Unaudited)
    
    
    5Condensed Consolidated Statements of Cash Flows for the Three Months
ended March 31, 2008 and 2009 (Unaudited)
    
    
    6Notes to Condensed Consolidated Financial Statements
    
    
    7Item 2. Managements Discussion and Analysis of Financial Condition and Results of
Operations
    
    
    16Item 3. Quantitative and Qualitative Disclosure About Market Risk
    
    
    21Item 4T. Controls and Procedures
    
    
    22PART II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    23Item 1A. Risk Factors
    
    
    23Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    23Item 3. Defaults Upon Senior Securities
    
    
    23Item 4. Submission of Matters to a Vote of Security Holders
    
    
    23Item 5. Other Information
    
    
    23Item 6. Exhibits
    
    
    23SIGNATURES
    
    
    24Rule 13a-14(a)/15d-14(a) CEO CertificationRule 13a-14(a)/15d-14(a) CFO CertificationSection 1350 CEO CertificationSection 1350 CFO Certification
   1




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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
     2




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PART I. FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 VIEWCAST.COM, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 December 31,
    
    
    March 31,2008
    
    
    2009(Unaudited)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    1,579,683
    
    
    $
    1,533,680Accounts receivable, less allowance for doubtful accounts of
$82,317 and $103,961 at December 31, 2008 and March 31, 2009, respectively
    
    
    2,654,217
    
    
    
    1,611,811Inventories, net
    
    
    2,824,236
    
    
    
    2,922,046Prepaid expenses
    
    
    352,089
    
    
    
    467,170Total current assets
    
    
    7,410,225
    
    
    
    6,534,707Property and equipment, net
    
    
    772,290
    
    
    
    817,489Goodwill
    
    
    
    
    
    
    620,002Intangible assets, net
    
    
    423,028
    
    
    
    1,419,780Deposits
    
    
    48,177
    
    
    
    48,129Total assets
    
    $
    8,653,720
    
    
    $
    9,440,107LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    1,106,892
    
    
    $
    788,459Accrued expenses
    
    
    1,143,882
    
    
    
    1,500,846Stockholder accrued interest
    
    
    169,846
    
    
    
    84,923Current maturities of long-term debt and stockholder notes payable
    
    
    159,032
    
    
    
    220,397Total current liabilities
    
    
    2,579,652
    
    
    
    2,594,625Long-term debt, less current maturities
    
    
    38,172
    
    
    
    32,739Stockholder notes payable, less current maturities
    
    
    5,012,827
    
    
    
    4,948,559Total liabilities
    
    
    7,630,651
    
    
    
    7,575,923Commitments and contingenciesStockholders equity:Preferred stock, $0.0001 par value, authorized 5,000,000 shares:Series B convertible  issued and outstanding shares  800,000  liquidation value
of $16 per share as of December 31, 2008 and March 31, 2009
    
    
    80
    
    
    
    80Series C convertible  issued and outstanding shares  200,000  liquidation value
of $31 and $32 per share as of December 31, 2008 and March 31, 2009, respectively
    
    
    20
    
    
    
    20Series E convertible  issued and outstanding shares  80,000  liquidation value
of $104 per share as of December 31, 2008 and March 31, 2009
    
    
    8
    
    
    
    8Common stock, $.0001 par value, authorized 100,000,000 shares:Issued shares   32,419,886 and 36,061,200 at December 31, 2008
and March 31, 2009, respectively
    
    
    3,242
    
    
    
    3,606Additional paid-in capital
    
    
    70,153,562
    
    
    
    71,529,650Accumulated deficit
    
    
    (69,121,937
    )
    
    
    (69,657,274
    )Treasury stock, 261,497 shares at cost
    
    
    (11,906
    )
    
    
    (11,906
    )Total stockholders equity
    
    
    1,023,069
    
    
    
    1,864,184Total liabilities and stockholders equity
    
    $
    8,653,720
    
    
    $
    9,440,107
   3




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VIEWCAST.COM, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 (UNAUDITED)
 For the three months endedMarch 31,2008
    
    
    2009Net sales
    
    $
    4,116,466
    
    
    $
    4,217,035Cost of sales
    
    
    1,337,609
    
    
    
    1,578,037Gross profit
    
    
    2,778,857
    
    
    
    2,638,998Operating expenses:Selling, general and administrative
    
    
    1,675,050
    
    
    
    2,246,115Research and development
    
    
    745,644
    
    
    
    736,043Depreciation and amortization
    
    
    112,253
    
    
    
    157,668Total operating expenses
    
    
    2,532,947
    
    
    
    3,139,826Operating income
    
    
    245,910
    
    
    
    (500,828
    )Other income (expense):Interest expense (including $50,565 and $33,465
of expense to related parties)
    
    
    (52,661
    )
    
    
    (35,643
    )Interest income
    
    
    12,456
    
    
    
    1,134Total other expense
    
    
    (40,205
    )
    
    
    (34,509
    )Income tax expense
    
    
    (4,800
    )
    
    
    NET INCOME (LOSS)
    
    $
    200,905
    
    
    $
    (535,337
    )Net loss applicable to common stockholdersPreferred stock dividends
    
    
    (205,029
    )
    
    
    (205,000
    )$
    (4,124
    )
    
    $
    (740,337
    )Net loss per shareBasic
    
    $
    (0.00
    )
    
    $
    (0.02
    )Diluted
    
    $
    (0.00
    )
    
    $
    (0.02
    )Weighted average number of common shares outstandingBasic
    
    
    32,080,256
    
    
    
    33,136,652Diluted
    
    
    32,080,256
    
    
    
    33,136,652
   4




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VIEWCAST.COM, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
FOR THE THREE MONTHS ENDED MARCH 31,2009
 (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
    
    
    Equity (Deficit)Balances, December 31, 2008
    
    
    800,000
    
    
    $
    80
    
    
    
    200,000
    
    
    $
    20
    
    
    
    80,000
    
    
    $
    8
    
    
    
    32,419,886
    
    
    $
    3,242
    
    
    $
    70,153,562
    
    
    $
    (69,121,937
    )
    
    $
    (11,906
    )
    
    $
    1,023,069Stock based compensation
expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    36,452
    
    
    
    
    
    
    
    
    
    
    
    36,452Exercise of warrants
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,500,000
    
    
    
    250
    
    
    
    939,750
    
    
    
    
    
    
    
    
    
    
    
    940,000Stock issuance for acquisition
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,141,314
    
    
    
    114
    
    
    
    399,886
    
    
    
    
    
    
    
    
    
    
    
    400,000Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (535,337
    )
    
    
    
    
    
    
    (535,337
    )Balances, March 31, 2009
    
    
    800,000
    
    
    $
    80
    
    
    
    200,000
    
    
    $
    20
    
    
    
    80,000
    
    
    $
    8
    
    
    
    36,061,200
    
    
    $
    3,606
    
    
    $
    71,529,650
    
    
    $
    (69,657,274
    )
    
    $
    (11,906
    )
    
    $
    1,864,184
   5




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VIEWCAST.COM, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (UNAUDITED)
 For the three months endedMarch 31,2008
    
    
    2009Operating activities:Net income (loss)
    
    $
    200,905
    
    
    $
    (535,337
    )Adjustments to reconcile net income (loss) to net cash
provided by operating activities:Bad debt expense
    
    
    13,935
    
    
    
    21,644Depreciation of property and equipment
    
    
    84,851
    
    
    
    104,851Amortization of intangible assets
    
    
    27,402
    
    
    
    52,817Stock based compensation expense
    
    
    24,914
    
    
    
    36,452Changes in operating assets and
liabilities : (net of effect of acquisition)Accounts receivable
    
    
    550,216
    
    
    
    1,221,120Inventories
    
    
    592,579
    
    
    
    (97,809
    )Prepaid expenses
    
    
    (116,857
    )
    
    
    (114,666
    )Deposits
    
    
    (2,128
    )
    
    
    48Accounts payable
    
    
    109,217
    
    
    
    (318,433
    )Accrued expenses
    
    
    123,598
    
    
    
    18,028Stockholder accrued interest
    
    
    27,487
    
    
    
    (84,923
    )Net cash provided by operating activities
    
    
    1,636,119
    
    
    
    303,792Investing activities:Capitalized software development costs
    
    
    (21,122
    )
    
    
    (115,569
    )Purchase of property and equipment
    
    
    (41,247
    )
    
    
    (134,468
    )Cash paid for acquisition
    
    
    
    
    
    
    (1,031,422
    )Net cash used in investing activities
    
    
    (62,369
    )
    
    
    (1,281,459
    )Financing activities:Net proceeds from exercise of warrants
    
    
    
    
    
    
    940,000Repayments of long-term debt
    
    
    (5,604
    )
    
    
    (8,336
    )Net cash provided by (used in) financing activities
    
    
    (5,604
    )
    
    
    931,664Net increase (decrease) in cash and cash equivalents
    
    
    1,568,146
    
    
    
    (46,003
    )Cash and cash equivalents, beginning of period
    
    
    1,135,416
    
    
    
    1,579,683Cash and cash equivalents, end of period
    
    $
    2,703,562
    
    
    $
    1,533,680Supplemental cash flow information:Cash paid for interest
    
    $
    25,175
    
    
    $
    120,566Non-cash items:Stock issued for acquisition
    
    $
    
    
    
    $
    400,000Acquisition of property and equipment under capital leases
    
    $
    48,361
    
    
    $
    
   6




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ViewCast.com, Inc. and Subsidiaries
 
 Note to Condensed Consolidated Financial Statements
 1. Basis of Presentation
     2. Acquisition
   7




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ViewCast.com, Inc. and Subsidiaries
Note to Condensed Consolidated Financial Statements  Continued
  Accounts receivable
    
    $
    160,760Prepaid expenses
    
    
    415Software
    
    
    850,000Customer related intangible assets
    
    
    60,000Non-compete agreements
    
    
    24,000Goodwill
    
    
    620,002Fixed assets
    
    
    15,583Total assets acquired
    
    
    1,730,760Liabilities assumed
    
    
    (299,338
    )Net assets acquired
    
    $
    1,431,422
   For the three months endedMarch 31,2008
    
    
    2009Net sales
    
    
    4,614,301
    
    
    
    4,377,662Net income (loss) applicable to common stockholders
    
    $
    45,082
    
    
    $
    (787,965
    )Basic and diluted net income (loss) per common share
applicable to common stockholders
    
    $
    0.00
    
    
    $
    (0.02
    )Weighted average number of common shares outstanding
(basic and diluted)
    
    
    33,221,570
    
    
    
    34,049,703
  8




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ViewCast.com, Inc. and Subsidiaries
Note to Condensed Consolidated Financial Statements  Continued
 3. Accounts Receivable
   For the three months endedMarch 31,2008
    
    
    2009(Unaudited)
    
    
    (Unaudited)Beginning balance
    
    $
    30,390
    
    
    $
    82,317Bad debt expense
    
    
    13,935
    
    
    
    21,644Ending balance
    
    $
    44,325
    
    
    $
    103,961
 4. Inventories
  December 31,
    
    
    March 31,2008
    
    
    2009(Unaudited)Purchased materials
    
    $
    1,670,260
    
    
    $
    1,848,290Finished goods
    
    
    1,207,518
    
    
    
    1,145,747Reserve
    
    
    (53,542
    )
    
    
    (71,991
    )$
    2,824,236
    
    
    $
    2,922,046
 5. Intangible Assets
  December 31,
    
    
    March 31,2008
    
    
    2009Customer lists
    
    $
    
    
    
    $
    60,000Non-compete agreements
    
    
    
    
    
    
    24,000Capitalized software
    
    
    1,385,215
    
    
    
    2,350,784Patents
    
    
    102,594
    
    
    
    102,594Less accumulated amortization
    
    
    (1,064,781
    )
    
    
    (1,117,598
    )$
    423,028
    
    
    $
    1,419,780
  9




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ViewCast.com, Inc. and Subsidiaries
Note to Condensed Consolidated Financial Statements  Continued
  For the three months ended2008
    
    
    2009Customer lists
    
    $
    
    
    
    $
    387Non-compete agreements
    
    
    
    
    
    
    580Capitalized software
    
    
    25,985
    
    
    
    50,341Patents
    
    
    1,417
    
    
    
    1,509$
    27,402
    
    
    $
    52,817
  Year ended December 31,2009
    
    $
    256,5362010
    
    
    305,3172011
    
    
    240,9482012
    
    
    150,7082013
    
    
    139,464Thereafter
    
    
    326,807$
    1,419,780
 6. Accrued Expenses
  December 31,
    
    
    March 31,2008
    
    
    2009(Unaudited)Accrued compensation
    
    $
    302,310
    
    
    $
    321,870Accrued warranty
    
    
    199,446
    
    
    
    201,201Accrued inventory purchases
    
    
    39,595
    
    
    
    23,953Customer deposits
    
    
    122,321
    
    
    
    69,182Deferred rent
    
    
    73,484
    
    
    
    66,677Deferred revenue
    
    
    156,611
    
    
    
    453,282Accrued taxes and other
    
    
    250,115
    
    
    
    364,681$
    1,143,882
    
    
    $
    1,500,846
  10




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ViewCast.com, Inc. and Subsidiaries
Note to Condensed Consolidated Financial Statements  Continued
 7. Warranty Reserves
   For the three months endedMarch 31,2008
    
    
    2009(Unaudited)
    
    
    (Unaudited)Beginning balance
    
    $
    133,940
    
    
    $
    199,446Charged to expense
    
    
    33,827
    
    
    
    9,395Usage
    
    
    (3,611
    )
    
    
    (7,640
    )Ending balance
    
    $
    164,156
    
    
    $
    201,201
 8. Property and Equipment
  EstimatedUseful Life
    
    December 31,
    
    
    March 31,(Years)
    
    2008
    
    
    2009(Unaudited)Service equipment
    
    3
    
    $
    242,362
    
    
    $
    242,362Computer equipment
    
    2 to 7
    
    
    420,398
    
    
    $
    447,025Software
    
    3 to 5
    
    
    184,038
    
    
    $
    184,038Leasehold improvements
    
    1 to 5
    
    
    172,697
    
    
    $
    172,697Office furniture and equipment
    
    5 to 7
    
    
    1,136,470
    
    
    $
    1,259,8942,155,965
    
    
    
    2,306,016Less accumulated depreciation
and amortization
    
    
    
    
    (1,383,675
    )
    
    
    (1,488,527
    )$
    772,290
    
    
    $
    817,489
 9. Long-Term Debt
   11




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ViewCast.com, Inc. and Subsidiaries
Note to Condensed Consolidated Financial Statements  Continued
  December 31, 2008
    
    
    March 31, 2009Aggregate of the Outstanding Principal
(Primary Principal Amount) as amended, with
interest only due monthly at a rate per annum
equal to the greater of 5% or prime plus 0.75%.
(4.0% at December 31, 2008 and March 31, 2009)
    
    $
    1,250,000
    
    
    $
    1,250,000Accrued and Outstanding Interest (Secondary
Principal Amount), with monthly principal
payments of $21,422 plus interest at a rate per
annum equal to the lesser of Applicable Federal
Rate (2.85% and 1.94% at December 31, 2008 and
March 31, 2009, respectively) or 9.5% fixed
rate, matures December 31, 2012.
    
    
    3,891,361
    
    
    
    3,891,361Other debt
    
    
    68,670
    
    
    
    60,334Total long-term debt
    
    
    5,210,031
    
    
    
    5,201,695Less current maturities
    
    
    (159,032
    )
    
    
    (220,397
    )Total long-term debt less current maturities
    
    $
    5,050,999
    
    
    $
    4,981,298
 10. Warrants
  WarrantsWeighted-Number
    
    
    Exercise
    
    
    Averageof Warrants
    
    
    Price
    
    
    Exercise PriceOutstanding and exercisable
at January 1, 2008
    
    
    2,500,000
    
    
    $
    0.48
    
    
    $
    0.48Exercised
    
    
    (2,500,000
    )
    
    
    0.376
    
    
    
    0.376Outstanding and exercisable
at March 31, 2009
    
    
    
   12




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ViewCast.com, Inc. and Subsidiaries
Note to Condensed Consolidated Financial Statements  Continued
 11. Earnings Per Share Data
   Three Months Ended March 31,2008
    
    
    2009(Unaudited)
    
    
    (Unaudited)Net income (loss) applicable to common stockholders  numerator for basic and diluted earnings per share
    
    $
    (4,124
    )
    
    $
    (740,337
    )Weighted  average common shares and dilutive potential common
shares outstanding  denominator for dilluted earning per share
    
    
    32,080,256
    
    
    
    33,136,652Net income (loss) per share:Basic
    
    $
    (0.00
    )
    
    $
    (0.02
    )Diluted
    
    $
    (0.00
    )
    
    $
    (0.02
    )Anti-dilutive securities excluded from diluted earnings per share:Stock options
    
    
    3,326,267
    
    
    
    4,019,310Warrants
    
    
    2,500,000
    
    
    
    Convertible preferred stock  Series B
    
    
    2,206,896
    
    
    
    2,206,896Convertible preferred stock  Series C
    
    
    3,333,333
    
    
    
    3,333,333Convertible preferred stock  Series E
    
    
    15,686,274
    
    
    
    13,333,333
 12. Stock-Based Compensation
    13




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ViewCast.com, Inc. and Subsidiaries
Note to Condensed Consolidated Financial Statements  Continued
    Stock OptionsWeighted-AverageNumber
    
    
    Price Per
    
    
    Exercise Priceof Shares
    
    
    Share
    
    
    Per ShareOutstanding at December 31, 2008
    
    
    4,065,935
    
    
    $
    0.20  $7.14
    
    
    $
    1.42Granted
    
    
    Exercised
    
    
    Canceled/forfeited
    
    
    (63,250
    )
    
    
    0.30  3.63
    
    
    
    3.08Outstanding at March 31, 2009
    
    
    4,002,685
    
    
    $
    0.20  $7.14
    
    
    $
    1.39
  Weighted-Average
    
    
    Weighted-
    
    
    
    
    
    
    Weighted-Range of
    
    Outstanding at
    
    
    Remaining
    
    
    Average
    
    
    Exercisable at
    
    
    AverageExercise
    
    March 31,
    
    
    Contractual
    
    
    Exercise
    
    
    March 31,
    
    
    ExercisePrices
    
    2009
    
    
    Life
    
    
    Price
    
    
    2009
    
    
    Price$0.01  1.00
    
    
    2,837,335
    
    
    
    5.4
    
    
    $
    0.40
    
    
    
    1,678,103
    
    
    $
    0.401.01  2.00
    
    
    541,350
    
    
    
    1.9
    
    
    
    1.12
    
    
    
    541,350
    
    
    
    1.122.01  3.00
    
    
    81,000
    
    
    
    1.3
    
    
    
    2.50
    
    
    
    81,000
    
    
    
    2.503.01  4.00
    
    
    2,500
    
    
    
    1.2
    
    
    
    3.52
    
    
    
    2,500
    
    
    
    3.524.01  5.00
    
    
    12,500
    
    
    
    0.6
    
    
    
    4.53
    
    
    
    12,500
    
    
    
    4.535.01  6.00
    
    
    116,000
    
    
    
    0.7
    
    
    
    5.44
    
    
    
    116,000
    
    
    
    5.447.01  8.00
    
    
    412,000
    
    
    
    0.5
    
    
    
    7.09
    
    
    
    312,000
    
    
    
    7.094,002,685
    
    
    
    4.2
    
    
    $
    1.39
    
    
    
    2,743,453
    
    
    $
    1.60
  14




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##### Table of Contents



ViewCast.com, Inc. and Subsidiaries
Note to Condensed Consolidated Financial Statements  Continued
 13. Income Taxes
   14. Related Party Transactions
  15. Accounts Receivable Loan Facility
  16. Preferred Stock Dividend
   15




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##### Table of Contents



ViewCast.com, Inc. and Subsidiaries
Managements Discussion and Analysis of Financial Condition and Results of Operation
 
 Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operation
  Overview
 ® ® ®
 . ® ®
  16




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##### Table of Contents



ViewCast.com, Inc. and Subsidiaries
Managements Discussion and Analysis of Financial Condition and Results of Operation  Continued
 Critical Accounting Policies
  
    
    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.
 
    
    Purchase Accounting, Goodwill and Intangible Assets We use the purchase method of
accounting for our business acquisition, accordingly, the statement of operation
include the results of acquired business since the date of acquisition. The assets
acquired and liabilities assumed are recorded at their
estimated fair value as determined by management and supported by an independent
third-party valuation.
 Goodwill arising from the acquisitions of business i
  17




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##### Table of Contents



ViewCast.com, Inc. and Subsidiaries
Managements Discussion and Analysis of Financial Condition and Results of Operation  Continued
 Results of Operations
 Three Months Ended March 31, 2009 compared to
Three Months Ended March 31, 2008.
 Net Sales. ® ®
 Osprey Product Sales .
 ViewCast Niagara® Streaming/Encoding System Sales.
 Other Revenues .
 Cost of Sales/Gross Profit .
  Selling, General and Administrative Expenses .
  18




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##### Table of Contents



ViewCast.com, Inc. and Subsidiaries
Managements Discussion and Analysis of Financial Condition and Results of Operation  Continued
 Research and Development Expense.
 Depreciation and Amortization Expense.
 Other Income (Expense).
 Net Income (Loss).
 Liquidity and Capital Resources
      19




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##### Table of Contents



ViewCast.com, Inc. and Subsidiaries
Managements Discussion and Analysis of Financial Condition and Results of Operation  Continued
        20




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##### Table of Contents



ViewCast.com, Inc. and Subsidiaries
Managements Discussion and Analysis of Financial Condition and Results of Operation  Continued
   Off-Balance Sheet Arrangements
  
 Item 3. Quantitative and Qualitative Disclosure About Market Risk
     21




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##### Table of Contents



ViewCast.com, Inc. and Subsidiaries
Controls and Procedures
 
 Item 4T. Controls and Procedures
 Evaluation of Disclosure Controls and Procedures
  Changes in Internal Control Over Financial Reporting
   22




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##### Table of Contents



PART II. OTHER INFORMATION
 
   
   
   
   
   
    
    23




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##### Table of Contents



SIGNATURES
  ViewCast.com, Inc.
(Registrant)Date: May 14, 2009
    BY:
    /s/ David T. StonerDavid T. StonerChief Executive Officer
Principal Executive OfficerDate: May 14, 2009
    BY:
    /s/ Laurie L. LathamLaurie L. LathamChief Financial Officer
Principal Financial and Accounting Officer  24




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##### Table of Contents



EXHIBIT INDEX
 ExhibitNumber31.1
    
    
    Rule 13a-14(a)/15d-14(a) CEO Certification31.2
    
    
    Rule 13a-14(a)/15d-14(a) CFO Certification32.1
    
    
    Section 1350 CEO Certification32.2
    
    
    Section 1350 CFO Certification
  25