##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 Form 10-KSB/A
 þ
    
    Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the fiscal year ended December 31, 2006.
 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: 0-29020
 ViewCast.com, Inc.
  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)
 Issuers Telephone Number, Including Area Code: 972-488-7200
   Common Stock, $.0001 par value
 o
 þ o
 þ
 o þ
 State issuers revenues for its most recent fiscal year.
    
    $13,981,096
    o þ




---



##### 



TABLE OF CONTENTS
 Item
    
    
    
    PageNo.
    
    
    
    No.Part I1.
    
    Description of Business
    
    
    32.
    
    Description of Property
    
    
    93.
    
    Legal Proceedings
    
    
    94.
    
    Submission of Matters to a Vote of Security Holders
    
    
    9Part II5.
    
    Market For Common Equity and Related Stockholder Matters
    
    
    106.
    
    Managements Discussion and Analysis or Plan of
Operation
    
    
    117.
    
    Financial Statements
    
    
    178.
    
    Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure
    
    
    428A.
    
    Controls and Procedures
    
    
    428B.
    
    Other Information
    
    
    43Part III9.
    
    Directors, Executive Officers, Promoters, Control Person and
Corporate Governance; Compliance with Section 16(a) of the
Exchange Act
    
    
    4310.
    
    Executive Compensation
    
    
    4711.
    
    Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters
    
    
    5212.
    
    Certain Relationships and Related Transactions, and Director
Independence
    
    
    5313.
    
    Exhibits
    
    
    5514.
    
    Principal Accountant Fees and Services
    
    
    59Employment Agreement with David T. Stoner2007 Executive Incentive Compensation Plan for David T. StonerEmployment Agreement with Laurie L. Latham2007 Executive Incentive Compensation Plan for Laurie L. LathamConsent of KBA Group LLPConsent of Grant Thornton LLPrule 13a-14(a)/15d-14(a) CertificationsSection 1350 Certifications




---



##### Table of Contents



PART I
 SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
    
 Item 1. Description of Business
 Overview
 ® ®
   3




---



##### Table of Contents



Industry Background and Market Drivers
    
    
    The return on investment for deployment of media streaming solutions appears to drive
deployments from both the technology standpoint and from the perspective of customer
demand. Customers want to access media content over the Internet and are willing to pay
for it and/or to allow advertisements.
    
    Simultaneously technology enhancements such as higher compression rates, better caching,
smart control of bandwidth utilization and higher resolution will likely spur further
growth as the viewing experience for end-users gets better.
    
    Online video-on-demand based business models are expected to drive further penetration
of streaming platforms. Various entertainment portals and media companies are entering the
market to convert the Internet into a profitable medium.
    
    The value proposition in terms of investment, flexibility and speed has started to
increase demand on the enterprise side. The main applications for this market segment are
in corporate communications and training.
  4




---



##### Table of Contents



How ViewCast Addresses the Industry
   Internet
    
    
    
    Corporate
    
    
    
    Distance
    
    SecurityTV
    
    Webcasting
    
    Comm.
    
    Training
    
    Learning
    
    SurveillanceNews, Sports,
Entertainment
    
    V
    
    VEnterprise
    
    
    
    V
    
    V
    
    V
    
    
    
    VGovernment
    
    V
    
    V
    
    V
    
    V
    
    
    
    VEducation
    
    V
    
    V
    
    V
    
    V
    
    V
    
    VReligion
    
    V
    
    V
    
    
    
    V
    
    V
 Drivers for Growth and Value
 
    
    Rapidly Growing Market. Media, enterprise, government, and network communication
sectors are rapidly adopting and allocating funds for digital media technologies due to the
increase in broadband penetration and customer demand for Internet-delivered media.
    
    Strong Products and Brand Equity. ViewCast is positioned for the market with well
known products that appeal to a broad range of industries and to continue investment in
research and development projects.
    
    Two-Pronged Sales Focus. Well established worldwide indirect channels and large
account & OEM business development.
    
    Industry/Technology Relationships. ViewCast product strategies leverage key marketing
and development relationships with notable technology industry leaders.
    
    Profitability and Increasing Revenue.Viewcast believes that a focus on revenue and
market share growth will enable us to realize long-term profitability and enhanced
shareholder value.
    
    Maintain Efficient Operations.We will continue to monitor expenses during 2007.
    
    Continue to Increase and Enhance Our Industry and Technology Relationships.We have
established significant industry partnerships with leaders in the technology and video
industry. We intend to strengthen these partnerships and continue to establish new
partnerships to enhance endorsements, referrals, technology, product development, channel
distribution, and sales. We seek companies who can add valuable services, technology or
bundling opportunities to our product offerings with the potential of future
co-development, merger or acquisition by ViewCast.
 5




---



##### Table of Contents



ViewCast Products and Services
 ® ®
 Osprey Video Products. ®
  Niagara Streaming Systems.
 ® ®
   Marketing and Sales
   6




---



##### Table of Contents



Production and Supply
   Installation, Service and Maintenance
   Research and Development
   7




---



##### Table of Contents



Competition
   Patents, Copyrights, Trademarks and Proprietary Information
  ® ® ® ® ® ®
   Government Regulation
  Employees
  8




---



##### Table of Contents



Item 2. Description of Property
   
 Item 3. Legal Proceedings
  
 Item 4. Submission of Matters to a Vote of Security Holders
  1.
    
    Election of directors for one-year terms.
 Number ofNumber of
    
    Number of
    
    Votes
    
    BrokerNominees
    
    Votes For
    
    Votes Against
    
    Abstaining
    
    Non-VotesGeorge C. Platt
    
    
    21,299,071
    
    
    
    417,320
    
    
    
    199,914
    
    
    
    662,807Joseph Autem
    
    
    21,686,626
    
    
    
    29,765
    
    
    
    199,914
    
    
    
    662,807Sherel Horsley
    
    
    21,686,526
    
    
    
    29,865
    
    
    
    199,914
    
    
    
    662,807John Slocum, Jr.
    
    
    21,685,906
    
    
    
    30,485
    
    
    
    199,914
    
    
    
    662,807
 2.
    
    Ratification of Grant Thornton LLP as the Companys independent auditors for the
fiscal year 2006.
 Number of Votes
    
    Number of Votes
    
    Number of Votes
    
    BrokerFor
    
    Against
    
    Abstaining
    
    Non-Votes21,846,728
    
    43,202
    
    26,375
    
    662,807
 9




---



##### Table of Contents



PART II
 
 Item 5. Market For Common Equity and Related Stockholder Matters
 Common Stock Price Range
  Common Stock
    
    Public WarrantsFiscal 2005
    
    High
    
    Low
    
    High
    
    Low1st Quarter
    
    $
    0.44
    
    
    $
    0.22
    
    
    $
    0.10
    
    
    $
    0.062nd Quarter
    
    
    0.42
    
    
    
    0.22
    
    
    
    0.08
    
    
    
    0.083rd Quarter
    
    
    0.36
    
    
    
    0.26
    
    
    
    0.19
    
    
    
    0.064th Quarter
    
    
    0.34
    
    
    
    0.20
    
    
    
    0.09
    
    
    
    0.06
 Common Stock
    
    Public WarrantsFiscal 2006
    
    High
    
    Low
    
    High
    
    Low1st Quarter
    
    $
    0.27
    
    
    $
    0.18
    
    
    $
    0.10
    
    
    $
    0.102nd Quarter
    
    
    0.24
    
    
    
    0.15
    
    
    
    0.14
    
    
    
    0.063rd Quarter
    
    
    0.23
    
    
    
    0.13
    
    
    
    0.10
    
    
    
    0.034th Quarter
    
    
    0.58
    
    
    
    0.13
    
    
    
    0.15
    
    
    
    0.07
  Dividend Policy
  10




---



##### Table of Contents



Item 6. Managements Discussion and Analysis or Plan of Operation
 Overview
 ® ®
   Discontinued Operations
   Financial Highlights of 2006
   11




---



##### Table of Contents



Critical Accounting Policies
  
    
    Revenue Recognition We apply provisions of SEC 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.
 Results of Operations
 Year Ended December 31, 2006 compared to Year Ended December 31, 2005.
 Net Sales .
 Osprey Product Sales .
 12




---



##### Table of Contents



ViewCast Niagara® Streaming/Encoding Systems.
 Other Revenues .
 Cost of Goods Sold/Gross Margins .
  Selling, General and Administrative Expense .
 Research and Development Expense.
 Other Expense
  Loss from Discontinued Operations.
 Net Loss .
 13




---



##### Table of Contents



Liquidity and Capital Resources
          14




---



##### Table of Contents



15




---



##### Table of Contents



Operating Leases
  Contractual Obligations
    
    (In thousands)and Commitments:
    
    2007
    
    2008
    
    2009
    
    2010
    
    2011
    
    Thereafter
    
    TotalOperating leases
    
    $
    331
    
    
    $
    331
    
    
    $
    331
    
    
    $
    331
    
    
    $
    182
    
    
    $
    9
    
    
    $
    1,515
  New Accounting Standards
 Share-Based Payment, Accounting for
Stock-Based Compensation Accounting for Stock Issued
to Employees.
  Off Balance Sheet Arrangements
  16




---



##### Table of Contents



Item 7. Financial Statements and Supplementary Data
 ViewCast.com, Inc. and Subsidiaries
Index to Consolidated Financial Statements
 Reports of Independent Registered Public Accounting
Firms
    
    
    18Consolidated Balance Sheets at December 31, 2005 and
2006
    
    
    20Consolidated Statements of Operations for the years ended
December 31, 2005 and 2006
    
    
    21Consolidated Statements of Stockholders Deficit for the
years ended December 31, 2005 and 2006
    
    
    22Consolidated Statements of Cash Flows for the years ended
December 31, 2005 and 2006
    
    
    23Notes to Consolidated Financial Statements
    
    
    24
 17




---



##### Table of Contents



,
  Share-Based Payments
 
 18




---



##### Table of Contents



,
   /s/ GRANT THORNTON LLP 
 19




---



##### Table of Contents



VIEWCAST.COM, INC. AND SUBSIDIARIES
 
 CONSOLIDATED BALANCE SHEETS
 December 31,
    
    
    December 31,2005
    
    
    2006ASSETSCurrent assets:Cash and cash equivalents
    
    $
    1,447,873
    
    
    $
    567,509Accounts receivable, less allowance for doubtful accounts
of $13,171 and $30,756 at December 31, 2005 and 2006
respectively
    
    
    1,304,776
    
    
    
    2,084,723Inventories, net
    
    
    2,011,491
    
    
    
    2,155,212Prepaid expenses
    
    
    73,074
    
    
    
    148,039Total current assets
    
    
    4,837,214
    
    
    
    4,955,483Property and equipment, net
    
    
    284,828
    
    
    
    446,758Intangible assets, net
    
    
    122,931
    
    
    
    177,737Deposits
    
    
    29,326
    
    
    
    59,107Total assets
    
    $
    5,274,299
    
    
    $
    5,639,085LIABILITIES AND STOCKHOLDERS DEFICITCurrent liabilities:Accounts payable
    
    $
    582,263
    
    
    $
    982,472Accrued expenses
    
    
    1,243,377
    
    
    
    1,020,535Stockholder line of credit
    
    
    3,350,000
    
    
    
    Current maturities of long-term debt
    
    
    142,389
    
    
    
    2,807Total current liabilities
    
    
    5,318,029
    
    
    
    2,005,814Long-term debt less current maturities
    
    
    3,298
    
    
    
    491Stockholder note payable
    
    
    6,775,230
    
    
    
    5,141,361Stockholder accrued interest
    
    
    2,213,761
    
    
    
    10,561Commitments 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
at December 31, 2006
    
    
    
    
    
    
    8Common stock, $.0001 par value, authorized 100,000,000 shares:Issued shares - 25,889,456 and 28,752,143 at December 31, 2005
and 2006, respectively
    
    
    2,589
    
    
    
    2,875Additional paid-in capital
    
    
    59,718,393
    
    
    
    68,986,065Accumulated deficit
    
    
    (68,745,195
    )
    
    
    (70,496,284
    )Treasury stock, 261,497 shares at cost
    
    
    (11,906
    )
    
    
    (11,906
    )Total stockholders deficit
    
    
    (9,036,019
    )
    
    
    (1,519,142
    )Total liabilities and stockholders deficit
    
    $
    5,274,299
    
    
    $
    5,639,085
  20




---



##### Table of Contents



VIEWCAST.COM, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 Year ended December 31,2005
    
    
    2006Net sales
    
    $
    11,559,204
    
    
    $
    13,981,096Cost of sales
    
    
    4,864,926
    
    
    
    6,280,863Gross profit
    
    
    6,694,278
    
    
    
    7,700,233Operating expenses:Selling, general and administrative
    
    
    5,470,746
    
    
    
    6,253,183Research and development
    
    
    2,284,566
    
    
    
    1,956,082Depreciation and amortization
    
    
    190,322
    
    
    
    338,431Total operating expenses
    
    
    7,945,634
    
    
    
    8,547,696Operating loss
    
    
    (1,251,356
    )
    
    
    (847,463
    )Other income (expense):Interest expense, net (including $945,054 and
$936,709 of expense to related parties)
    
    
    (950,588
    )
    
    
    (913,802
    )Debt conversion expense
    
    
    (485,798
    )
    
    
    Other
    
    
    1,477
    
    
    
    10,176Total other expense
    
    
    (1,434,909
    )
    
    
    (903,626
    )Income tax expense
    
    
    (28,250
    )
    
    
    Loss from continuing operations
    
    
    (2,714,515
    )
    
    
    (1,751,089
    )Loss from discontinued operations
    
    
    (341,751
    )
    
    
    NET LOSS
    
    $
    (3,056,266
    )
    
    $
    (1,751,089
    )Preferred stock dividends
    
    
    (819,243
    )
    
    
    (819,243
    )Net loss applicable to common stockholders
    
    $
    (3,875,509
    )
    
    $
    (2,570,332
    )Net loss per share  basic and diluted:Continuing operations
    
    $
    (0.14
    )
    
    $
    (0.10
    )Discontinued operations
    
    
    (0.02
    )
    
    
    0.00Net loss per share  basic and diluted
    
    $
    (0.16
    )
    
    $
    (0.10
    )Weighted average number of common shares
outstanding  basic and diluted
    
    
    24,964,955
    
    
    
    25,792,662
  21




---



##### Table of Contents



VIEWCAST.COM, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF STOCKHOLDERS DEFICIT
 FOR THE YEARS ENDED DECEMBER 31, 2005 AND 2006
 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, 2004
    
    
    800,000
    
    
    $
    80
    
    
    
    200,000
    
    
    $
    20
    
    
    
    
    
    
    $
    
    
    
    
    23,104,942
    
    
    $
    2,310
    
    
    $
    57,715,654
    
    
    $
    (65,688,929
    )
    
    $
    (11,906
    )
    
    $
    (7,982,771
    )Sale of common stock, employee
stock purchase plan
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    45,056
    
    
    
    5
    
    
    
    10,515
    
    
    
    
    
    
    
    
    
    
    
    10,520Conversion of Preferred D
shares to common stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,739,458
    
    
    
    274
    
    
    
    1,992,224
    
    
    
    
    
    
    
    
    
    
    
    1,992,498Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,056,266
    )
    
    
    
    
    
    
    (3,056,266
    )Balances, December 31, 2005
    
    
    800,000
    
    
    $
    80
    
    
    
    200,000
    
    
    $
    20
    
    
    $
    
    
    
    $
    
    
    
    
    25,889,456
    
    
    $
    2,589
    
    
    $
    59,718,393
    
    
    $
    (68,745,195
    )
    
    $
    (11,906
    )
    
    $
    (9,036,019
    )Stock based compensation expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,384
    
    
    
    
    
    
    
    
    
    
    
    8,384Conversion of stockholder line of
credit and note payable
into
Series E Preferred stock,
common stock and warrants
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    80,000
    
    
    
    8
    
    
    
    2,862,687
    
    
    
    286
    
    
    
    9,259,288
    
    
    
    
    
    
    
    
    
    
    
    9,259,582Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,751,089
    )
    
    
    
    
    
    
    (1,751,089
    )Balances, 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
    )
  22




---



##### Table of Contents



VIEWCAST.COM, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 Year ended December 31,2005
    
    
    2006Operating activities:Net loss from continuing operations
    
    $
    (2,714,515
    )
    
    $
    (1,751,089
    )Adjustments to reconcile net loss to net cash
used in operating activities:Loss from discontinued operations
    
    
    (341,751
    )
    
    
    Bad debt expense
    
    
    20,722
    
    
    
    17,585Depreciation of property and equipment
    
    
    128,857
    
    
    
    195,067Amortization of software development costs
    
    
    61,465
    
    
    
    143,364Non-cash debt conversion expense
    
    
    485,798
    
    
    
    Stock based compensation expense
    
    
    
    
    
    
    8,384Loss on disposition of property and equipment
    
    
    121
    
    
    
    13,219Changes in operating assets and liabilitiesAccounts receivable
    
    
    (280,095
    )
    
    
    (797,532
    )Inventories
    
    
    (454,102
    )
    
    
    (143,721
    )Prepaid expenses
    
    
    33,912
    
    
    
    (74,965
    )Deposits
    
    
    14,485
    
    
    
    (29,781
    )Accounts payable
    
    
    (108,011
    )
    
    
    400,209Accrued expenses and stockholder accrued interest
    
    
    883,566
    
    
    
    1,465,317Net cash used in continuing operations
    
    
    (2,269,548
    )
    
    
    (553,943
    )Net cash provided by discontinued operations
    
    
    238,138
    
    
    
    Net cash used in operating activities
    
    
    (2,031,410
    )
    
    
    (553,943
    )Investing activities:Capitalized software development costs
    
    
    
    
    
    
    (181,976
    )Purchase of property and equipment
    
    
    (189,996
    )
    
    
    (390,120
    )Proceeds from disposition of property and equipment
    
    
    
    
    
    
    3,711Net cash used in continuing operations
    
    
    (189,996
    )
    
    
    (568,385
    )Net cash provided by discontinued operations
    
    
    3,270,723
    
    
    
    Net cash provided by (used in) investing
activities
    
    
    3,080,727
    
    
    
    (568,385
    )Financing activities:Net proceeds from stockholder line of credit
    
    
    450,000
    
    
    
    250,000Proceeds from sale of common stock and preferred stock
    
    
    10,520
    
    
    
    Repayments of long-term debt
    
    
    (6,262
    )
    
    
    (8,036
    )Net cash provided by continuing operations
    
    
    454,258
    
    
    
    241,964Net cash used in discontinued operations
    
    
    (302,823
    )
    
    
    Net cash provided by financing activities
    
    
    151,435
    
    
    
    241,964Net increase (decrease) in cash and cash equivalents
    
    
    1,200,752
    
    
    
    (880,364
    )Cash and cash equivalents, beginning of period
    
    
    247,121
    
    
    
    1,447,873Cash and cash equivalents, end of period
    
    $
    1,447,873
    
    
    $
    567,509Supplemental cash flow information:Cash paid for interest
    
    $
    3,596
    
    
    $
    8,458Supplemental non-cash flow operating activities:Conversion of Series D redeemable convertible preferred
stock to common stock
    
    $
    1,506,700
    
    
    $
    Conversion of Stockholder debt to common stock,
Series E convertible preferred stock and warrants
    
    $
    
    
    
    $
    9,259,582Conversion of Stockholder accrued interest to Stockholder
note payable
    
    $
    
    
    
    $
    3,891,361
  23




---



##### Table of Contents



1. The Company and Description of Business
 ® ®
  2. Summary of Significant Accounting Policies
 Principles of Consolidation
  Cash and Cash Equivalents
  Accounts Receivable
  24




---



##### Table of Contents



ViewCast.com, Inc.
Notes to the Consolidated Financial Statements  Continued
  Year ended December 31,2005
    
    
    2006Beginning balance
    
    $
    13,382
    
    
    $
    13,171Bad debt expense
    
    
    20,722
    
    
    
    17,585Uncollectible accounts written off
    
    
    (22,751
    )
    
    
    Recoveries
    
    
    1,818
    
    
    
    Ending balance
    
    $
    13,171
    
    
    $
    30,756
 Inventories
  Property and Equipment
  Intangible Assets and Amortization
    December 31, 2005
    
    December 31, 2006Average life
    
    Gross carrying
    
    Accumulated
    
    Gross carrying
    
    Accumulated(years)
    
    amount
    
    amortization
    
    amount
    
    amortizationCapitalized
Software Costs
    
    
    3
    
    
    $
    851,635
    
    
    $
    728,704
    
    
    $
    966,717
    
    
    $
    867,985Patents
    
    
    17
    
    
    
    
    
    
    
    
    
    
    
    83,409
    
    
    
    4,404$
    851,635
    
    
    $
    728,704
    
    
    $
    1,050,126
    
    
    $
    872,389
 25




---



##### Table of Contents



ViewCast.com, Inc.
Notes to the Consolidated Financial Statements  Continued
  2007
    
    2008
    
    2009
    
    Thereafter
    
    TotalCapitalized
Software Costs
    
    $
    38,361
    
    
    $
    38,361
    
    
    $
    22,010
    
    
    $
    
    
    
    $
    98,732Patents
    
    
    4,907
    
    
    
    4,907
    
    
    
    4,907
    
    
    
    64,284
    
    
    
    79,005$
    43,268
    
    
    $
    43,268
    
    
    $
    26,917
    
    
    $
    64,284
    
    
    $
    177,737
 Impairment of Long-Lived Assets
  Revenue Recognition
   Net Loss Per Share
  Year Ended December 31,2005
    
    2006Stock options
    
    
    3,015,150
    
    
    
    2,739,700Public and private warrants
    
    
    4,782,082
    
    
    
    4,746,482Convertible preferred stock  Series B
    
    
    2,206,896
    
    
    
    2,206,896Convertible preferred stock  Series C
    
    
    3,333,333
    
    
    
    3,333,333Redeemable convertible preferred stock  Series
D
    
    
    217,373
    
    
    
    Convertible preferred stock  Series E
    
    
    
    
    
    
    3,137,25513,554,834
    
    
    
    16,163,666
 26




---



##### Table of Contents



ViewCast.com, Inc.
Notes to the Consolidated Financial Statements  Continued
 Warranty Reserves
   Year ended December 31,2005
    
    
    2006Beginning balance
    
    $
    57,744
    
    
    $
    57,667Charged to expense
    
    
    48,279
    
    
    
    127,237Usage
    
    
    (48,356
    )
    
    
    (67,268
    )Ending balance
    
    $
    57,667
    
    
    $
    117,636
 Risks and Uncertainties
  Customers exceeding 10% ofCustomers Exceeding 10%
    
    Year-End Accounts Receivableof Net Sales
    
    BalanceNumber of
    
    Combined
    
    Number of
    
    CombinedYear
    
    Customers
    
    Percent
    
    Customers
    
    Percent2005
    
    
    0
    
    
    
    0
    %
    
    
    2
    
    
    
    22
    %2006
    
    
    1
    
    
    
    13
    %
    
    
    2
    
    
    
    29
    %
   Use of Estimates
  27




---



##### Table of Contents



ViewCast.com, Inc.
Notes to the Consolidated Financial Statements  Continued
 Income Taxes
  Advertising Costs
  Fair Value of Financial Instruments
  Stock-Based Compensation
    2005Net loss applicable to common
stockholders:As reported
    
    $
    (3,875,509
    )Deduct total stock-based compensation
under fair value based method for all
awards
    
    
    (569,478
    )Pro forma
    
    $
    (4,444,987
    )Net loss per share  basic and diluted:As reported
    
    $
    (0.16
    )Pro forma
    
    $
    (0.18
    )
  28




---



##### Table of Contents



ViewCast.com, Inc.
Notes to the Consolidated Financial Statements  Continued
     29




---



##### Table of Contents



ViewCast.com, Inc.
Notes to the Consolidated Financial Statements  Continued
 Year EndedDecember 31,2005
    
    2006Expected volatility
    
    
    108
    %
    
    
    109
    %Risk-free interest rate
    
    
    4.15
    %
    
    
    4.76
    %Expected dividends
    
    
    0.0
    %
    
    
    0.0
    %Expected term in years
    
    
    4.50
    
    
    
    4.08
  3. Inventories
  December 31,2005
    
    
    2006Purchased materials
    
    $
    775,232
    
    
    $
    1,410,411Finished goods
    
    
    1,236,259
    
    
    
    744,801$
    2,011,491
    
    
    $
    2,155,212
 4. Discontinued Operations
   Period January 1 toNovember 18,2005Net sales
    
    $
    10,424,717Cost of sales
    
    
    8,030,885Gross profit
    
    
    2,393,832Operating expenses
    
    
    2,236,181Operating income
    
    
    157,651Other expense:
    
    
    (485,543
    )Net loss before taxes
    
    
    (327,892
    )Income tax expense
    
    
    (13,859
    )Net (loss)
    
    $
    (341,751
    )
 30




---



##### Table of Contents



ViewCast.com, Inc.
Notes to the Consolidated Financial Statements  Continued
 5. Property and Equipment
  EstimatedUseful Life
    
    December 31,(Years)
    
    2005
    
    
    2006Computer equipment
    
    3 to 7
    
    $
    1,185,281
    
    
    $
    408,174Software
    
    3 to 5
    
    
    625,835
    
    
    
    132,909Leasehold improvements
    
    1 to 5
    
    
    23,232
    
    
    
    121,746Office furniture and equipment
    
    5 to 7
    
    
    658,562
    
    
    
    604,7682,492,910
    
    
    
    1,267,597Less accumulated depreciation
and
amortization
    
    
    
    
    (2,208,082
    )
    
    
    (820,839
    )$
    284,828
    
    
    $
    446,758
 6. Accrued Expenses
  December 31,2005
    
    
    2006Stockholder accrued interest (short-term)
    
    $
    758,086
    
    
    $
    Accrued compensation
    
    
    126,026
    
    
    
    217,445Accrued warranty
    
    
    57,667
    
    
    
    117,636Accrued inventory purchases
    
    
    71,162
    
    
    
    95,068Customer deposits
    
    
    
    
    
    
    166,844Deferred rent
    
    
    2,763
    
    
    
    118,496Accrued taxes and other
    
    
    227,673
    
    
    
    305,046$
    1,243,377
    
    
    $
    1,020,535
 7. Stockholder Line of Credit and Other Short-term Debt
 Stockholder Line of Credit
   31




---



##### Table of Contents



ViewCast.com, Inc.
Notes to the Consolidated Financial Statements  Continued
    December 31, 2005
    
    December 31, 2006$4.0 million line of credit note
payable to principal stockholder
of the Company, secured by all
assets of Borrower, with interest
due on demand at the lesser of
prime plus 3.0% (7.25% at
December 31, 2005) or 9.5% fixed
rate.
    
    $
    3,350,000
    
    
    $
    $
    3,350,000
    
    
    $
    
 8. Long-term Debt
 Stockholder Term Note
   32




---



##### Table of Contents



ViewCast.com, Inc.
Notes to the Consolidated Financial Statements  Continued
  December 31, 2005
    
    
    December 31, 2006Stockholder term note with an entity controlled by a principal
stockholder of the Company, collateralized by all assets of the
Company, with interest due at a rate per annum equal to the
lesser
of prime plus 3.0% (7.25% at December 31, 2005) or 9.5% fixed
rate.
    
    $
    6,909,582
    
    
    $
    Aggregate of the Outstanding Principal (Primary Principal
Amount), with interest due at a rate per annum equal to the
lesser of prime plus 1.0% (8.25% at December 31, 2006) or 9.5%
fixed rate, due December 31, 2009.
    
    
    
    
    
    
    1,250,000Accrued and Outstanding Interest (Secondary Principal
Amount), with interest due at a rate per annum equal to the
lesser of Applicable Federal Rate (4.73% at December 31, 2006)
or 9.5% fixed rate, due December 31, 2009.
    
    
    
    
    
    
    3,891,361Other long-term debt
    
    
    11,335
    
    
    
    3,298Total long-term debt
    
    
    6,920,917
    
    
    
    5,144,659Less current maturities
    
    
    (142,389
    )
    
    
    (2,807
    )Total long-term debt less current maturities
    
    $
    6,778,528
    
    
    $
    5,141,852
  Long-term Notes
    
    
    StockholderYear ended December 31
    
    Payable
    
    
    Accrued Interest2007
    
    $
    2,807
    
    
    $
    2008
    
    
    491
    
    
    
    2009
    
    
    5,141,361
    
    
    
    10,561$
    5,144,659
    
    
    $
    10,561
 9. Conversion of Convertible Debt to Equity
   33




---



##### Table of Contents



ViewCast.com, Inc.
Notes to the Consolidated Financial Statements  Continued
  Increase inPrincipal
    
    
    
    
    
    
    CommonNumber
    
    
    Amount
    
    
    Debt
    
    
    Stock, ParConversion of Series D Redeemable
    
    of Equity
    
    
    of Debt
    
    
    Conversion
    
    
    and Paid inConvertible Preferred Shares
    
    Securities
    
    
    Reduction
    
    
    Expense
    
    
    CapitalConversion shares under original terms
    
    
    974,254Principal amount converted into equity
    
    
    
    
    
    $
    1,506,700
    
    
    
    
    
    
    $
    (1,506,700
    )Additional conversion shares under
lowered conversion terms
    
    
    1,765,204
    
    
    
    
    
    
    $
    485,798
    
    
    
    (485,798
    )2,739,458
    
    
    $
    1,506,700
    
    
    $
    485,798
    
    
    $
    (1,992,498
    )
 10. Conversion of Ardinger Debt to Equity
  34




---



##### Table of Contents



ViewCast.com, Inc.
Notes to the Consolidated Financial Statements  Continued
 11. Income Taxes
   Year ended December 31,2005
    
    
    2006Deferred tax assets:Net operating loss carryforwards
    
    
    25,388,000
    
    
    
    26,129,000Revenue deferred for financial statements,
recognized for tax
    
    
    9,000
    
    
    
    31,000Excess of tax over financial statement basis of
patent
    
    
    8,000
    
    
    
    4,000Accruals deductible for tax purposes when paid
    
    
    138,000
    
    
    
    209,000Excess of tax over financial statement basis of
property and equipment
    
    
    203,000
    
    
    
    63,000Excess of tax over financial statement basis of
software development costs
    
    
    493,000
    
    
    
    355,000Total deferred tax assets
    
    
    26,239,000
    
    
    
    26,791,000Deferred tax liabilities:Excess of financial statement over tax basis
of goodwill and customer contracts
    
    
    
    
    
    
    Net deferred tax assets
    
    
    26,239,000
    
    
    
    26,791,000Less: valuation allowance
    
    
    (26,239,000
    )
    
    
    (26,791,000
    )Net deferred taxes
    
    
    
    
    
    
    
  Year ended December 31,2005
    
    2006U.S. federal statutory rate applied to pretax
loss
    
    
    (1,025,000
    )
    
    
    (595,000
    )State tax net of federal benefit
    
    
    19,000
    
    
    
    Change in valuation allowance
    
    
    1,017,000
    
    
    
    552,000Other
    
    
    17,000
    
    
    
    43,00028,000
    
    
    
    
 35




---



##### Table of Contents



ViewCast.com, Inc.
Notes to the Consolidated Financial Statements  Continued
  YearEnded
    
    
    
    Amount2009
    
    
    
    
    $
    2,700,0002010
    
    
    
    
    
    4,700,0002011
    
    
    
    
    
    4,000,0002012
    
    
    
    
    
    5,400,0002018
    
    
    
    
    
    7,700,0002019
    
    
    
    
    
    13,200,0002020
    
    
    
    
    
    8,100,0002021
    
    
    
    
    
    8,500,0002022
    
    
    
    
    
    4,400,0002023
    
    
    
    
    
    2,700,0002024
    
    
    
    
    
    3,600,0002025
    
    
    
    
    
    3,800,0002026
    
    
    
    
    
    2,000,000
   12. Stockholders Deficit
 Preferred Stock
      36




---



##### Table of Contents



ViewCast.com, Inc.
Notes to the Consolidated Financial Statements  Continued
  Common Stock
   Stock Option Plans
      37




---



##### Table of Contents



ViewCast.com, Inc.
Notes to the Consolidated Financial Statements  Continued
  Stock OptionsWeighted-AverageNumber
    
    
    Price Per
    
    
    Exercise Priceof Shares
    
    
    Share
    
    
    Per ShareOutstanding at January 1, 2005
    
    
    2,819,166
    
    
    $
    0.20 -        $9.00
    
    
    $
    2.45Granted
    
    
    578,000
    
    
    
    0.22 - 0.41
    
    
    
    0.28Exercised
    
    
    Canceled/forfeited
    
    
    (272,524
    )
    
    
    0.20 - 6.59
    
    
    
    2.19Outstanding at December 31,
2005
    
    
    3,124,642
    
    
    $
    0.20 -        $9.00
    
    
    $
    2.07Granted
    
    
    155,000
    
    
    
    0.20 - 0.39
    
    
    
    0.23Exercised
    
    
    Canceled/forfeited
    
    
    (745,042
    )
    
    
    0.20 - 5.50
    
    
    
    1.25Outstanding at December 31,
2006
    
    
    2,534,600
    
    
    $
    0.20 -        $9.00
    
    
    $
    2.20
   Weighted-Average
    
    
    Weighted-
    
    
    
    
    
    
    Weighted-Range of
    
    
    
    
    Outstanding at
    
    
    Remaining
    
    
    Average
    
    
    Exercisable at
    
    
    AverageExercise
    
    
    
    
    December 31,
    
    
    Contractual
    
    
    Exercise
    
    
    December 31,
    
    
    ExercisePrices
    
    
    
    
    2006
    
    
    Life
    
    
    Price
    
    
    2006
    
    
    Price$
    0.01 - 1.00
    
    
    
    
    
    1,173,250
    
    
    
    6.8
    
    
    $
    0.38
    
    
    
    1,010,750
    
    
    $
    0.401.01 - 2.00
    
    
    
    
    
    576,850
    
    
    
    4.1
    
    
    
    1.15
    
    
    
    576,850
    
    
    
    1.152.01 - 3.00
    
    
    
    
    
    120,000
    
    
    
    2.8
    
    
    
    2.53
    
    
    
    120,000
    
    
    
    2.533.01 - 4.00
    
    
    
    
    
    67,500
    
    
    
    1.9
    
    
    
    3.50
    
    
    
    67,500
    
    
    
    3.504.01 - 5.00
    
    
    
    
    
    52,500
    
    
    
    1.2
    
    
    
    4.32
    
    
    
    52,500
    
    
    
    4.325.01 - 6.00
    
    
    
    
    
    117,500
    
    
    
    2.9
    
    
    
    5.50
    
    
    
    117,500
    
    
    
    5.506.01 - 7.00
    
    
    
    
    
    2,000
    
    
    
    2.3
    
    
    
    7.00
    
    
    
    2,000
    
    
    
    7.007.01 - 8.00
    
    
    
    
    
    410,000
    
    
    
    2.7
    
    
    
    7.10
    
    
    
    260,000
    
    
    
    7.108.01 - 9.00
    
    
    
    
    
    15,000
    
    
    
    0.0
    
    
    
    9.00
    
    
    
    15,000
    
    
    
    9.002,534,600
    
    
    
    4.9
    
    
    $
    2.20
    
    
    
    2,222,100
    
    
    $
    2.02
 Employee Stock Purchase Plan
   38




---



##### Table of Contents



ViewCast.com, Inc.
Notes to the Consolidated Financial Statements  Continued
  Warrants
   WarrantsWeighted-Number
    
    
    Exercise
    
    
    Averageof Warrants
    
    
    Price
    
    
    Exercise PriceOutstanding and
exercisable
at January 2005
    
    
    4,572,982
    
    
    $
    0.45 - 5.00
    
    
    $
    1.00Granted
    
    
    
    
    
    
    
    
    
    
    Exercised
    
    
    
    
    
    
    
    
    
    
    Cancelled
    
    
    (89,000
    )
    
    
    5.00
    
    
    
    5.00Outstanding and
exercisable
at December 2005
    
    
    4,483,982
    
    
    $
    0.28 - 1.00
    
    
    $
    0.31Granted
    
    
    2,500,000
    
    
    
    0.48
    
    
    
    0.48Exercised
    
    
    
    
    
    
    
    
    
    
    Cancelled
    
    
    
    
    
    
    
    
    
    
    Outstanding and
exercisable
at December 2006
    
    
    6,983,982
    
    
    $
    0.28 - 1.00
    
    
    $
    0.37
    39




---



##### Table of Contents



ViewCast.com, Inc.
Notes to the Consolidated Financial Statements  Continued
  13. Employee Benefit Plan
  14. Commitments and Contingencies
  OperatingLeasesYear ended December 31:2007
    
    $
    331,3332008
    
    
    331,3332009
    
    
    331,3332010
    
    
    331,3332011
    
    
    181,7012012
    
    
    8,907Total minimum lease payments
    
    $
    1,515,940
  15. Related Party Transactions
    40




---



##### Table of Contents



ViewCast.com, Inc.
Notes to the Consolidated Financial Statements  Continued
   16. Subsequent Events
  41




---



##### Table of Contents



Item 8. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
     
 Item 8A. Controls and Procedures
   42




---



##### Table of Contents



Item 8B. Other Information
    
 PART III
 
 Item 9. Directors, Executive Officers, Promoters, Control Persons, and Corporate Governance;
Compliance with Section 16(a) of the Exchange Act
  Name
    
    Age
    
    Director Since
    
    Office Held with CompanyGeorge C. Platt
    
    
    66
    
    
    
    1999
    
    
    Chairman and Chief Executive OfficerJoseph Autem
    
    
    49
    
    
    
    1999
    
    
    DirectorSherel D. Horsley
    
    
    64
    
    
    
    2006
    
    
    DirectorJohn W. Slocum, Jr.
    
    
    66
    
    
    
    2006
    
    
    Director
 George C. Platt
 Joseph Autem
 43




---



##### Table of Contents



Sherel D. Horsley
 John W. Slocum, Jr. Journal of World Business Organizational Dynamics Journal of Leadership and
Organizational Studies Organizational Behavior
  Executive Officers
  Name
    
    Age
    
    Office Held with CompanyGeorge C. Platt
    
    
    66
    
    
    Chief Executive OfficerLaurie L. Latham
    
    
    50
    
    
    Chief Financial Officer and Senior Vice President of Finance and
AdministrationDavid T. Stoner
    
    
    50
    
    
    President and Chief Operating OfficerHorace S. Irwin
    
    
    65
    
    
    Senior Vice President of Marketing and Business Development
 44




---



##### Table of Contents



George C. Platts
 Laurie L. Latham
 David T. Stoner
 Horace S. Irwin
 Meetings of the Board of Directors and Committees
   Compensation Committee.
  45




---



##### Table of Contents



Audit Committee.
   Nomination of Directors
   Code of Ethics
   Shareholder Communications with the Board of Directors.
 Compliance with Section 16(a) of the Securities Exchange Act of 1934
  46




---



##### Table of Contents



Item 10. Executive Compensation
 Director Compensation
     
    
    Each independent director of the Corporation shall be paid a cash retainer
equal to $500 per month with an additional cash payment for each meeting of the Board of
Directors of the Corporation equal to $1,000 if attended in person and $250 if attended by
telephone; and
    
    Each independent director of the Corporation who has not previously served on
the Board of Directors of the Corporation be granted options under the 2005 Stock
Incentive Plan, as described below, to acquire 50,000 shares of the Corporation upon the
appointment to the Board of Directors with such option grant to vest annually in three
equal parts with the first such installment to vest one year from the date of grant; and
    
    Each independent director of the Corporation be granted options under the 2005
Stock Incentive Plan to acquire 25,000 shares of the Corporation each year immediately
following the date of the Corporations annual meeting, provided that such independent
director shall have served as a director of the Corporation at least twelve months prior
to the date of such grant, with such option grant to vest annually in three equal parts
with the first such installment to vest one year from the date of grant.
  47




---



##### Table of Contents



Name
    
    Fees Earned(1)($)
    
    Option Awards(2)($)
    
    Total ($)Joseph Autem
    
    
    7,000
    
    
    
    2,271
    
    
    
    9,271Sherel D. Horsley
    
    
    8,500
    
    
    
    2,355
    
    
    
    10,855John W. Slocum, Jr.
    
    
    9,000
    
    
    
    2,355
    
    
    
    11,355
 
 (1)
    
    Includes meeting fees earned during the fiscal year, whether such fees were
paid currently or deferred.(2)
    
    Represents the compensation cost recognized for the fiscal year for options to
purchase shares of ViewCast.com, Inc. common stock outstanding to the director,
regardless of the year in which granted and calculated in accordance with FAS 123R
for financial statement purposes. For more information concerning the assumptions
used for these calculations, please refer to the discussion under Note 2 to the
audited financial statements. Summary Compensation Table
  SUMMARY COMPENSATION TABLE
 Non-EquityIncentiveName and Principal positions
    
    Year
    
    Salary(1)($)
    
    Bonus(1)($)
    
    Plan Compensation(2)($)
    
    Total(3)($)George Platt, Chairman and CEO
    
    
    2006
    
    
    
    125,000
    
    
    
    
    
    
    
    
    
    
    
    125,000David Stoner, President and
COO
    
    
    2006
    
    
    
    183,000
    
    
    
    5,000
    
    
    
    
    
    
    
    188,000Laurie Latham, CFO and Sr. VP
Finance and Administration
    
    
    2006
    
    
    
    171,000
    
    
    
    5,000
    
    
    
    
    
    
    
    176,000Horace Irwin, Sr. VP Sales and
Business Development
    
    
    2006
    
    
    
    120,000
    
    
    
    
    
    
    
    38,618
    
    
    
    158,618
 
 (1)
    
    The figures shown for salary and bonus represent amounts earned for the fiscal
year, whether or not actually paid during such year, and include amounts deferred
pursuant to non-incentive deferred compensation plans.(2)
    
    Represent amounts earned for services rendered during the fiscal year under our
Sr. VP of Sales and Business Development Incentive Compensation Plan, whether or not
actually paid during such fiscal year. Incentive payments calculated based on
achievement of 90.68% of the cumulative quota for Osprey sales through May 31, 2006,
plus achievement of 89% of the total quota for the fourth quarter.(3)
    
    The named executive officers participate in certain group life, health,
disability insurance and medical reimbursement plans, not disclosed in the Summary
Compensation Table, that are generally available to salaries employees and do not
discriminate in scope, terms and operation. 48




---



##### Table of Contents



Stock Awards and Stock Option Grants Outstanding
  OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END TABLE
 Option AwardsNumber of
    
    Number ofSecurities
    
    SecuritiesUnderlying
    
    UnderlyingUnexercised
    
    Unexercised
    
    Option
    
    OptionOptions (#)
    
    Options (#)
    
    Exercise
    
    ExpirationName
    
    Exercisable
    
    Unexercisable
    
    Price ($)
    
    Date
    
    Vesting Schedule250,000
    
    
    
    
    
    
    
    7.0940
    
    
    
    09/17/09
    
    
    Fully vested on December 31, 200616,666 shares of this option shall vest whenthe average closing price of ViewCastCommon Stock, for a 20 out of 30consecutive trading day period, has doubledin price from the exercise price; theremaining 33,334 shares shall vest in equalinstallments of 1,388 shares per monthGeorge Platt
    
    
    
    
    
    
    50,000
    
    
    
    7.0940
    
    
    
    09/17/09
    
    
    thereafter.16,666 shares of this option shall vest whenthe average closing price of ViewCast Common Stock, for a 20out of 30 consecutive trading day period, has doubledin price from the exercise price; theremaining 33,334 shares shall vest in equalinstallments of 1,388 shares per month50,000
    
    
    
    7.0940
    
    
    
    09/17/09
    
    
    thereafter.All shares vest immediately on the datefollowing three consecutive quarters ofprofitability as defined by GAAP50,000
    
    
    
    7.0940
    
    
    
    09/17/09
    
    
    consistently applied by the Company.50,000
    
    
    
    
    
    
    
    2.5000
    
    
    
    08/04/10
    
    
    Fully vested on December 31, 2006200,000
    
    
    
    
    
    
    
    1.0940
    
    
    
    02/28/11
    
    
    Fully vested on December 31, 200670,000
    
    
    
    
    
    
    
    0.4850
    
    
    
    07/03/12
    
    
    Fully vested on December 31, 200680,000
    
    
    
    
    
    
    
    0.2850
    
    
    
    04/19/15
    
    
    Fully vested on December 31, 2006100,000
    
    
    
    
    
    
    
    5.5005
    
    
    
    12/21/09
    
    
    Fully vested on December 31, 200610,000
    
    
    
    
    
    
    
    2.5000
    
    
    
    08/04/10
    
    
    Fully vested on December 31, 2006Laurie L. Latham
    
    
    100,000
    
    
    
    
    
    
    
    1.0940
    
    
    
    02/28/11
    
    
    Fully vested on December 31, 200660,000
    
    
    
    
    
    
    
    0.4850
    
    
    
    07/03/12
    
    
    Fully vested on December 31, 200650,000
    
    
    
    
    
    
    
    0.2850
    
    
    
    04/19/15
    
    
    Fully vested on December 31, 20065,000
    
    
    
    
    
    
    
    2.0625
    
    
    
    09/09/08
    
    
    Fully vested on December 31, 200615,000
    
    
    
    
    
    
    
    5.5005
    
    
    
    12/21/09
    
    
    Fully vested on December 31, 2006David T. Stoner
    
    
    10,000
    
    
    
    
    
    
    
    2.5000
    
    
    
    08/04/10
    
    
    Fully vested on December 31, 2006100,000
    
    
    
    
    
    
    
    1.0940
    
    
    
    02/28/11
    
    
    Fully vested on December 31, 200660,000
    
    
    
    
    
    
    
    0.4850
    
    
    
    07/03/12
    
    
    Fully vested on December 31, 200650,000
    
    
    
    
    
    
    
    0.2850
    
    
    
    04/19/15
    
    
    Fully vested on December 31, 2006Horace S. Irwin
    
    
    45,000
    
    
    
    
    
    
    
    0.3900
    
    
    
    07/02/14
    
    
    Fully vested on December 31, 200620,000
    
    
    
    
    
    
    
    0.2850
    
    
    
    04/19/15
    
    
    Fully vested on December 31, 2006
 49




---



##### Table of Contents



2005 Stock Incentive Plan
    Employee Stock Purchase Plan
   Employment Agreements
 (1)
 50




---



##### Table of Contents



(1)
    
    The options granted to Mr. Platt consist of five separate option grants that become
exercisable or vest as follows provided Mr. Platt is employed by ViewCast as of the applicable
vesting date: (i)
    
    an option for 50,000 shares that vested as of September 17, 2000;(ii)
    
    an option for 200,000 shares that vested in equal installments of 4,166 shares per
month beginning in October, 2000;(iii)
    
    an option for 50,000 shares that will vest immediately on the date following three
consecutive calendar quarters of profitability as defined under generally accepted
accounting principles;(iv)
    
    an option for 50,000 shares, of which 16,666 shares of such option will vest when the
average closing price of Common Stock, for a twenty out of thirty consecutive trading day
period, has doubled in price from the exercise price ($7.094) of the option, and of which
33,334 shares of such option will vest in equal installments of 1,388 share per month
thereafter;(v)
    
    an option for 50,000 shares, of which 16,666 shares of such option will vest when the
average closing price of Common Stock, for a twenty out of thirty consecutive trading day
period, has tripled in price from the exercise price of the option, and of which 33,334
shares of such option will vest in equal installment of 1,388 shares per month thereafter. In addition, all of the 400,000 options granted to Mr. Platt will immediately vest upon a change
of control in ViewCast if not previously vested. 51




---



##### Table of Contents



Item 11.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
  Amount and Nature
    
    Percentage ofName and Address
    
    of
    
    Outstanding Sharesof Beneficial Owner
    
    Beneficial Ownership
    
    Owned (1),(2)H.T.
ARDINGER, JR.
    
    
    29,649,601
    (3)
    
    
    52.91990
Lakepointe Dr. Lewisville, TX 75057DAVID RUGGIERI
    
    
    2,068,500
    (4)
    
    
    3.7525 East
Olympia Ave. 
Punta Gorda, FL 33950DONALD ADAMS
    
    
    1,657,000
    (4)
    
    
    3.0370
Crestmont Drive San Luis Obispo, CA 93401GEORGE C. PLATT
    
    
    790,694
    (5)
    
    
    1.4LAURIE L. LATHAM
    
    
    351,892
    (6)
    
    
    *HORACE S. IRWIN
    
    
    82,092
    (7)
    
    
    *DAVID T. STONER
    
    
    250,994
    (8)
    
    
    *JOSEPH AUTEM
    
    
    123,200
    (9)
    
    
    *SHEREL D. HORSLEY
    
    
    
    
    
    
    *JOHN W. SLOCUM, JR.
    
    
    10,000
    
    
    
    *All named executive officers and
    
    
    1,608,872
    
    
    
    2.9directors as a group
(seven (7) persons)
 
 *
    
    Less than one percent (1%)(1)
    
    A person is deemed to be the beneficial owner of securities that can be acquired by such
person within 60 days from March 31, 2007 upon the exercise of warrants or options. Each
beneficial owners percentage ownership is determined by assuming that options or warrants
that are held by such person (but not those held by any other person) and which are
exercisable within 60 days from March 31, 2007 have been exercised. Unless otherwise
indicated, we believe that all persons named in the table have sole voting and investment
power with respect to all shares of Common Stock beneficially owned by them.(2)
    
    Based on a total of 32,045,256 shares issued and outstanding excluding treasury stock plus,
for each person listed, any Common Stock that person has the right to acquire within 60 days
from March 31, 2007 pursuant to options, warrants, conversion privileges, etc.(3)
    
    Includes (i) 181,501 shares owned by Mr. Ardingers spouse, (ii) 3,062,687 shares owned by
Ardinger Family Trust, (iii) 2,500,000 shares of Common Stock reserved for issuance upon the
exercise of outstanding warrants at $0.48 per share owned by Ardinger Family Trust, (iv)
1,103,448 shares of Common Stock reserved for issuance upon the conversion of $4,000,000 of
Series B Convertible Preferred Stock to Common Stock at $3.625 per share, (v) 3,333,333 shares
of Common Stock reserved for issuance upon the conversion of $2,000,000 of Series C
Convertible Preferred Stock to Common Stock at $0.60 per share, and (vi) 15,686,275 shares of
Common Stock reserved for issuance upon the conversion of $8,000,000 of Series E Convertible
Preferred Stock to Common Stock at $0.51 per share owned by Ardinger Family Partnership. 52




---



##### Table of Contents



(4)
    
    Information is based on Forms 13G filed as of public record.(5)
    
    Includes the following shares issuable under the 1995 Option Plan upon exercise of options
(i) 250,000 shares exercisable at $7.09 per share, (ii) 50,000 shares exercisable at $2.50 per
share, (iii) 200,000 shares exercisable at $1.094 per share, (iv) 70,000 shares exercisable at
$0.485 per share and (v) 80,000 shares exercisable at $0.285 per share.(6)
    
    Includes the following shares issuable under the 1995 Option Plan upon exercise of options
(i) 100,000 shares exercisable at $5.5005 per share, (ii) 10,000 shares exercisable at $2.50 per
share, (iii) 100,000 shares exercisable at $1.094 per share, (iv) 60,000 shares exercisable at
$0.485 per share and (v) 50,000 shares exercisable at $0.285 per share.(7)
    
    Includes the following shares issuable under the 1995 Option Plan upon exercise of options
(i) 45,000 shares exercisable at $0.39 per share and (ii) 20,000 shares exercisable at $0.285
per share.(8)
    
   Includes the following shares issuable under the 1995 Option Plan upon exercise of options (i) 5,000 shares exercisable at $2.0625
per share, (ii) 15,000 exercisable at $5.5005 per share, (iii) 10,000 shares exercisable at
$2.50 per share, (iv) 100,000 shares exercisable at $1.094 per share, (v) 60,000 shares
exercisable at $0.485 per share and (vi) 50,000 shares exercisable at $0.285 per share.(9)
    
    Includes the following shares issuable under the 1995 Directors Option Plan upon exercise of
options (i) 15,000 shares exercisable at $3.1250 per share, (ii) 10,000 shares exercisable at
$7.1405 per share, (iii) 10,000 shares exercisable at $2.50 per share, (iv) 10,000 shares
exercisable at $0.755 per share, (v) 10,000 shares exercisable at $0.26 per share, (vi) 10,000
shares exercisable at $0.615 per share, (vii) 10,000 shares exercisable at $0.37 per share;
and includes 40,000 shares issuable under the 1995 Option Plan upon exercise of options at
$3.6250 per share. Equity Compensation Plan Information
  Number of securities remainingNumber of securities to be
    
    
    
    
    
    available for future issuance underissued upon exercise of
    
    Weighted-average exercise
    
    equity compensation plansoutstanding options,
    
    price of outstanding options,
    
    (excludingwarrants and rights
    
    warrants and rights
    
    securities reflected in column (a))Plan category
    
    (a)
    
    (b)
    
    (c)Equity compensation
plans approved by
security holders
    
    
    2,534,600
    
    
    $
    2.20
    
    
    
    3,438,794Equity compensation
plans not approved
by security holders
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    2,534,600
    
    
    $
    2.20
    
    
    
    3,438,794
 
 Item 12. Certain Relationships and Related Transactions and Director Independence
 Certain Relationships and Related Transactions
  53




---



##### Table of Contents



Director Independence
   54




---



##### Table of Contents



Item 13. Exhibits, Financial Statement Schedules and Reports on Form 8-K
 (a)
    
    The following consolidated financial statements required by this item are included
in Part II Item 8 of this report:
 Reports of Independent Registered Public Accounting Firm
    
    
    18Consolidated Balance Sheets as of December 31, 2005 and
2006
    
    
    20Consolidated Statements of Operations for the years ended
December 31, 2005 and 2006
    
    
    21Consolidated Statements of Stockholders Deficit for the
years December 31, 2005 and 2006
    
    
    22Consolidated Statements of Cash Flows for the years ended
December 31, 2005 and 2006
    
    
    23Notes to Consolidated Financial Statements
    
    
    24
  EXHIBIT INDEX
 ExhibitPageNo.
    
    Description of Exhibit2
    
    Agreement and Plan of Merger and Reorganization (1)3(a)
    
    Certificate of Incorporation (1)3(b)
    
    Amendment to Certificate of Incorporation (1)3(c)
    
    Restated By-Laws (6)3(d)
    
    Certificate of Designations of Series B Convertible Preferred Stock (3)3(e)
    
    Certificate of Designations of Series C Convertible Preferred Stock (9)3.1
    
    Certificate of Designation of Series D Redeemable Convertible Preferred Stock of
ViewCast.com, Inc. dated as of October 10, 2002. (12)3.2
    
    Certificate of Designation of Series E Convertible Redeemable Preferred Stock (26)4(a)
    
    Form of Common Stock Certificate (1)4(b)
    
    Form of Warrant Certificate (1)4(c)
    
    Form of Warrant Agreement between ViewCast and Continental Stock Transfer & Trust
Company (1)4(d)
    
    Form of Representatives Warrant Agreement (1)4(e)
    
    Reserve4(f)
    
    Reserve4(g)
    
    Notice of Extension of Warrant Expiration Date and Exercise Price Adjustment (8)4 (h)
    
    Warrant Issued to Ardinger Family Partnership, Ltd. (26)5(a)
    
    Form of Opinion of Thacher Proffit & Wood LLP as to the legality of securities
being registered. (5)9(a)
    
    Reserve9(b)
    
    Reserve9(c)
    
    Reserve
 55




---



##### Table of Contents



ExhibitPageNo.
    
    Description of Exhibit9(d)
    
    Reserve9(e)
    
    Reserve9(f)
    
    Reserve10(a)
    
    Reserve10(b)
    
    Reserve10(c)
    
    Form of Indemnification Agreement between ViewCast and Executive Officers and
Directors (1)10(d)
    
    1995 Stock Option Plan (1)10(e)
    
    1994 Stock Option Plan (1)10(f)
    
    Reservel0(g)
    
    1995 Director Option Plan (1)10(h)
    
    Reserve10(i)
    
    Employee Stock Purchase Plan (1)l0(j)
    
    Reserve10(k)
    
    Reserve10(n)
    
    Reserve10(r)
    
    Reserve10(s)
    
    Reserve10(t)
    
    Reserve10(u)
    
    Reserve10(v)
    
    Reserve10(w)
    
    Reserve10(x)
    
    Reserve10(y)
    
    Reserve10(z)
    
    Reserve10(aa)
    
    Reserve10(bb)
    
    Reserve10(cc)
    
    Working Capital Line of Credit Loan Agreement between ViewCast and the Ardinger Family Partnership, Ltd. (4)10(dd)
    
    Employee Stock Option Plan Amendment No.1 (7)10(ee)
    
    Sublease Agreement between ViewCast and Host Communications, Inc. (9)10(ff)
    
    Employee Stock Option Plan Amendment No. 2 (10)10(gg)
    
    Reserve10.1
    
    Reserve10.2
    
    Reserve10.3
    
    Reserve10.4
    
    Reserve10.5
    
    Revolving Loan Agreement between MMAC Communications Corp. and Keltic Financial Partners, LP dated as of October 11, 2002. (12)10.6
    
    Guaranty of Payment and Performance from ViewCast.com, Inc. to Keltic Financial Partners, LP dated as of October 11, 2002. (12)10.7
    
    Subordination Agreement by and among Keltic Financial Partners, LP, MMAC Communication Corp. and ViewCast.com, Inc. dated as of October 11, 2002. (12)10.8
    
    General Security Agreement by and between MMAC Communications Corp. and Keltic Financial Partners, LP dated as of October 11, 2002. (12)10.9
    
    Revolving Note by MMAC Communications Corp. in favor of Keltic Financial Partners, LP dated as of October 11, 2002. (12)
 56




---



##### Table of Contents



ExhibitPageNo.
    
    Description of Exhibit10.10
    
    Reserve10.11
    
    Reserve10.12
    
    Reserve10.13
    
    Reserve10.14
    
    Reserve10.15
    
    Form of Amended and Restated Security Agreement dated October 15, 2003 between ViewCast.com, Inc. and the Ardinger Family Partnership, LTD. (13)10.16
    
    Form of Amended and Restated Pledge Agreement dated October 15, 2003 between ViewCast.com, Inc. and the Ardinger Family Partnership, LTD. (13)10.17
    
    Form of First Amendment to the Revolving Loan Agreement dated October 11, 2003 between Delta Computec Inc. and Keltic Financial Partners, LP. (13)10.18
    
    1995 Director Option Plan Amendment No. 2 (15)10.19
    
    Second Amendment dated as of October 10, 2004 to Revolving Loan Agreement between MMAC Communications Corp. and Keltic Financial Partners, LP dated as of
October 11, 2002. (12)10.20
    
    Third Amendment dated as of December 10, 2004 to Revolving Loan Agreement between MMAC Communications Corp. and Keltic Financial Partners, LP dated as of
October 11, 2002. (16)10.21
    
    Fourth Amendment dated as of January 10, 2005 to Revolving Loan Agreement between MMAC Communications Corp. and Keltic Financial Partners, LP dated as of
October 11, 2002. (16)10.22
    
    Fifth Amendment dated as of February 15, 2005 to Revolving Loan Agreement between MMAC Communications Corp. and Keltic Financial Partners, LP dated as of
October 11, 2002. (16)10.23
    
    Notice of Lower Temporary Conversion Price dated March 21, 2005. (17)10.24
    
    Letter Agreement Amending Revolving and Term Credit Facility dated March 22, 2005. (17)10.25
    
    Sixth Amendment, dated as if April 15, 2005, to Revolving Loan Agreement Between MMAC Communications Corp. and Keltic Financial Partners, LP dated as of
October 11, 2002. (18)10.26
    
    Seventh Amendment, dated as if July 15, 2005, to Revolving Loan Agreement Between MMAC Communications Corp. and Keltic Financial Partners, LP dated as of
October 11, 2002. (19)10.27
    
    Letter Agreement Amending Revolving and Term Credit Facility dated July 22, 2005. (20)10.28
    
    Eighth Amendment, dated as if October 11, 2005, to Revolving Loan Agreement Between MMAC Communications Corp. and Keltic Financial Partners, LP dated as of
October 11, 2002. (21)10.29
    
    Reserve10.30
    
    Office Lease Agreement between ViewCast and TR Plano Parkway Partners, L.P. (22)10.31
    
    Letter Agreement Amending Revolving and Term Credit Facility dated March 20, 2006. (23)10.32
    
    Office Lease Agreement between ViewCast and Valwood Centreport, LP (24)10.33
    
    Registration Rights Agreement by and among ViewCast and Ardinger Family Partnership, Ltd. Dated as of December 11, 2006 (25)10.34
    
    Second Amended Loan and Security Agreement dated as of December 11, 2006 (25)10.35
    
    Exchange Agreement dated as of
December 11, 2006 by and among ViewCast, Osprey Technologies, Inc. and Videoware, Inc. and Ardinger Family Partnership, Ltd. (25)10.36
    
    Employment Agreement by and between ViewCast Corporation and David T. Stoner Effective as of March 1, 2007.
 57




---



##### Table of Contents



ExhibitPageNo.
    
    Description of Exhibit10.37
    
    2007 Executive Incentive Compensation Plan for David T. Stoner10.38
    
    Employment Agreement by and between ViewCast Corporation and Laurie L. Latham Effective as of March 1, 2007.10.39
    
    2007 Executive Incentive Compensation Plan for Laurie L. Latham14.1
    
    Code of Ethics (14)21
    
    List of Subsidiaries of ViewCast. (1)23.1
    
    Consent of KBA Group LLP*23.2
    
    Consent of Grant Thornton LLP*31.1
    
    Rule 13a-14(a)/15d-14(a) Certifications*32.1
    
    Statement 1350 Certifications*
 
 *
    
    Filed herewith.(1)
    
    Incorporated by reference to the Registration Statement on Form SB-2 and all amendments
thereto as declared effective on February 4, 1997.(2)
    
    Reserve(3)
    
    Incorporated by reference to Form 8-K filed March 15, 1999.(4)
    
    Reserve(5)
    
    Incorporated by reference to Form S-3 filed May 6, 1999.(6)
    
    Incorporated by reference to Form S-3 filed June 30, 2000.(7)
    
    Incorporated by reference to Form S-8 POS filed October 16, 2000.(8)
    
    Incorporated by reference to Form 8-K filed January 23, 2002.(9)
    
    Incorporated by reference to Form 10-K filed April 16, 2002.(10)
    
    Incorporated by reference to Form 8-K filed May 7, 2002.(11)
    
    Incorporated by reference to Form 10-Q filed May 20, 2002.(12)
    
    Incorporated by reference to Form 8-K filed October 25, 2002.(13)
    
    Incorporated by reference to Form 10-Q filed November 14, 2003.(14)
    
    Incorporated by reference to Form 10-KSB filed on March 30,2004.(15)
    
    Incorporated by reference to Form S-8 filed September 17, 2004.(16)
    
    Incorporated by reference to Form 8-K filed March 25, 2005.(17)
    
    Incorporated by reference to Form 8-K filed March 25, 2005.(18)
    
    Incorporated by reference to Form 8-K filed April 21, 2005.(19)
    
    Incorporated by reference to Form 8-K filed July 18, 2005.(20)
    
    Incorporated by reference to Form 8-K filed July 27, 2005.(21)
    
    Incorporated by reference to Form 8-K filed October 17, 2005.(22)
    
    Incorporated by reference to Form 8-K filed January 17, 2005.(23)
    
    Incorporated by reference to Form 8-K filed March 22, 2006.(24)
    
    Incorporated by reference to Form 8-K filed November 2, 2006.(25)
    
    Incorporated by reference to Form 8-K filed December 15, 2006 
 58




---



##### Table of Contents



Item 14. Principal Accountant Fees and Services
  2005
    
    
    2006Audit (1)
    
    $
    113,026
    
    
    $
    98,450Audit Related Fees (2)
    
    
    13,340
    
    
    
    1,130Tax Fees (3)
    
    
    29,846
    
    
    
    35,348All Other Fees
    
    
    
    
    
    
    TOTAL
    
    $
    156,212
    
    
    $
    134,928
 
 (1)
    
    Consists primarily of quarterly review and annual audit services(2)
    
    Consists primarily of 401(k) audit and annual shareholder meeting services(3)
    
    Consists primarily of Federal and State tax services  
 59




---



##### Table of Contents



Date
    ViewCast.com, Inc.April 30, 2007
    
    By:
    
    /s/ Laurie L. LathamLaurie L. LathamChief Financial Officer andSenior Vice President of Financeand Administration
  Date
    ViewCast.Com, Inc.April 30, 2007
    
    By:
    
    /s/ George C. PlattGeorge C. PlattDirector and Chief Executive OfficerPrincipal Executive OfficerApril 30, 2007
    
    By:
    
    /s/ Laurie L. LathamLaurie L. LathamChief Financial Officer and Senior
Vice President of Finance and AdministrationPrincipal Financial and Accounting OfficerApril 30, 2007
    
    By:
    
    /s/ Joseph W. AutemJoseph W. AutemDirectorApril 30, 2007
    
    By:
    
    /s/ Sherel D. HorsleySherel D. HorsleyDirectorApril 30, 2007
    
    By:
    
    /s/ John W. Slocum, Jr.John W. Slocum, Jr.Director
 60




---



##### Table of Contents



EXHIBIT INDEX FOR DOCUMENTS FILED WITH THIS REPORT
 ExhibitNo.
    
    Description of Exhibit10.36
    
    Employment Agreement by and between ViewCast Corporation and
David T. Stoner Effective as of March 1, 2007.10.37
    
    2007 Executive Incentive Compensation Plan for David T. Stoner10.38
    
    Employment Agreement by and between ViewCast Corporation and
Laurie L. Latham Effective as of March 1, 2007.10.39
    
    2007 Executive Incentive Compensation Plan for Laurie L. Latham23.1
    
    Consent of KBA Group LLP23.2
    
    Consent of Grant Thornton LLP31.1
    
    Rule 13a-14(a)/15d-14(a) Certifications32.1
    
    Section 1350 Certifications
 61