SECURITIES AND EXCHANGE COMMISSION

-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, EjphBYEMRJBC1kQM/+ojvPVmqG+NIM0YE7VTQCvj7ODeLqswiNewSHBRNrDT6zFb +TScNa73ahiVava/pGizNg== 0000020232-04-000008.txt : 20040330 0000020232-04-000008.hdr.sgml : 20040330 20040330154944 ACCESSION NUMBER: 0000020232-04-000008 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 11 CONFORMED PERIOD OF REPORT: 20031231 FILED AS OF DATE: 20040330 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CHYRON CORP CENTRAL INDEX KEY: 0000020232 STANDARD INDUSTRIAL CLASSIFICATION: PHOTOGRAPHIC EQUIPMENT & SUPPLIES [3861] IRS NUMBER: 112117385 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-05110 FILM NUMBER: 04700894 BUSINESS ADDRESS: STREET 1: 5 HUB DR CITY: MELVILLE STATE: NY ZIP: 11747 BUSINESS PHONE: 5168452000 MAIL ADDRESS: STREET 1: 5 HUB DRIVE CITY: MELVILLE STATE: NY ZIP: 11747 FORMER COMPANY: FORMER CONFORMED NAME: COMPUTER EXCHANGE INC DATE OF NAME CHANGE: 19760114 10-K 1 k20031.htm SECURITIES AND EXCHANGE COMMISSION

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2003
Commission File Number 1-9014

CHYRON CORPORATION
(Exact name of registrant as specified in its charter)

New York		11-2117385
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

5 Hub Drive, Melville, New York		11747
(Address of principal executive offices)		(Zip Code)

Registrant's telephone number, including area code:		(631) 845-2000

Securities registered pursuant to Section 12(b) of the Act:

None		None
(Title of Class)		(Name of exchange on which registered)

Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $.01
(Title of Class)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter periods that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

YES

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ( )

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act).

YES

The aggregate market value of voting stock held by non-affiliates of the Company on June 30, 2003 was $11,579,425. The number of shares outstanding of the issuer's common stock, par value $.01 per share, on March 1, 2004 was 40,721,359.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the proxy statement for the Annual Meeting of Shareholders to be held May 19, 2004 are incorporated by reference into Part III.

Exhibit index is located on page 72

This document consists of 76 pages

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From time to time, including in this Annual Report on Form 10-K, we may publish "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 relating to such matters as anticipated financial performance, liquidity and capital resources, business prospects, technological developments, changes in the industry, new products, research and development activities and similar matters. Although we believe that the expectations reflected in such "forward-looking statements" are reasonable, we can give no assurance that such expectations will prove to have been correct. Actual results could differ materially from our expectations. Information on significant potential risks and uncertainties not discussed herein may be found in our filings with the Securities and Exchange Commission. The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements. In order to comply with the terms of the safe harbor, we note that a variety of factors could cause our actual results to differ materially from the anticipated results or other expectations expressed in our "forward-looking statements." Factors that can cause or contribute to these differences include those described under the headings "Factors Affecting Future Results" and "Management's Discussion and Analysis of Financial Condition and Results of Operations." The risks and uncertainties that may affect the operations, performance, development and results of our business include, without limitation, the following: product concentration in a mature market, dependence on the emerging digital market and the industry's transition to digital television ("DTV") and high definition television ("HDTV"), consumer acceptance of DTV and HDTV, resistance within the broadcast or cable industry to implement DTV and HDTV technology, rapid technological changes, continued g rowth, use and improvement of the Internet, new technologies that could render certain Chyron products to be obsolete, a highly competitive environment, competitors with significantly greater financial resources, new product introductions by competitors, seasonality, fluctuations in quarterly operating results, ability to maintain adequate levels of working capital, expansion into new markets and our ability to successfully maintain the costs associated with recent restructurings.

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PART I

ITEM 1. BUSINESS

General Information Regarding the Company

Chyron Corporation ("Chyron" or the "Company" or "we") was incorporated under the laws of the State of New York on April 8, 1966 under the name The Computer Exchange, Inc., which was changed to the present name on November 28, 1975. Our principal executive offices are located at 5 Hub Drive, Melville, New York 11747 and our telephone number is (631) 845-2000.

On November 6, 2003, we completed the sale of Chyron UK Holdings Limited, including its operating subsidiary, Pro-Bel Limited. The Pro-Bel division specialized in the development of routers and associated equipment enabling the management and delivery of high bandwidth digital video, digital audio and other data signals. It also provided high-end transmission automation and media asset management solutions. In effect, this eliminates the entire operations of the Signal Distribution and Automation segment and only the Graphics Division will remain. As a result, the Company will now focus completely on its core-competency, the development of real-time graphics solutions for its worldwide professional video and TV broadcast customers. Consequently, this segment has been eliminated and the operating results will be reported as discontinued operations. Prior year Statements of Operations and Cash Flows have been restated to reflect this segment as a discontinued operation.

Overview

Chyron Corporation has been a leading supplier of graphics hardware and software to the television industry for over three decades. The Company develops, manufactures, markets and supports hardware and software products that enhance the presentation of live and pre-recorded video, audio and other data. We also provide products for graphics authoring for the worldwide emerging markets of interactive TV. Recently, the Company has migrated and transitioned from a closed, proprietary architecture to one that is open, and Windows^®-based. Currently, Chyron designs the video "engine" that powers each product, writes software applications, assembles and tests components that make up the character generator ("CG") and clips and still server systems, and provides an experienced customer service team. Chyron's products enable customers to:

create, manipulate and manage text, logos and other graphic images using special effects, real-time animations, 3D transforming and compositing,

utilize clip and still servers for moving images and stills.

Our products are intended to meet the myriad of demands of digital television, which includes high definition television mandated by the United States Federal Communications Commission ("FCC") in 1996. The transition from analog to digital signals in the video and audio world has created a range of new means to deliver video and audio content to the consumer. These range from high definition television ("HDTV"), through standard definition digital TV ("DTV"), and interactive TV services to the Internet, where the ability to incorporate

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video to enhance web sites or to deliver a video channel without a broadcast license continues to attract a growing number of participants.

From the time the Company introduced its first character generator in 1970, Chyron's graphics products have grown to become integral to television operations all over the world. Chyron offers a comprehensive experience in providing integrated, scalable real-time graphics solutions. Since the Company has established such a strong presence in the live, "on-air" television graphics segment, its customers have grown to include most major broadcast, cable, satellite and postproduction facilities in the U.S. and Europe. A small sampling of users includes ABC, ESPN, Fox News, C-SPAN, Discovery, Home Shopping Network, Fox Sports, CBS, CBC (Canada), Comcast, DirecTV, Shop At Home, Court TV, CNN, BBC (UK), France 3, Korean Broadcast, YV Catalonia (Spain), NBA, Turner Entertainment, and hundreds of local and regional stations. The Company plans on leveraging and building on its leading brand image and large installed base in the broadcast graphics market to further penetrate the post-produ ction, corporate, educational and professional video market sectors. In addition, the Company will continue to be involved in the interactive market by developing partnerships to deliver advanced interactive graphics tools.

Products and Services

The Company offers a broad range of graphics products that meet the needs of television stations, networks, video production and postproduction markets. The Company's line of high-performance graphics systems is used by many of the world's leading broadcast stations to display news flashes, election results, sports scores, stock market quotations, programming notes and weather information. In the area of interactive television, Chyron is leveraging its expertise as a provider of broadcast tools to promote solutions to create and deliver interactive content.

All of the Company's products are Windows^®-based, feature open architecture, and use a high content of off-the-shelf components. Industry standard interface protocol allows Chyron's equipment to be easily integrated into any television system. Furthermore, the Company's software has become a powerful application for products offered by leading broadcast manufacturers such as Avid and Thomson Grass Valley, greatly extending the capabilities of those products.

The Company is dedicated to providing the highest quality and most comprehensive array of broadcast graphics applications, ranging from low-cost CG packages that run on a user-supplied computer, to fully integrated systems providing precision management of text, stills, clips, effects, audio, storage and networking. A summary description of Chyron's selected products and services is listed below.

Hardware Products

The Duetâ family: The Duet family is a real-time 2D/3D serial digital video graphics processing platform that integrates a Windowsâ NT, Windowsâ XP or Windows^® 2000 front end with real-time graphics processing to provide exceptional performance for television character generator applications. It has become the digital replacement for the iNFiNiT!^® family of

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products, which accounted for almost 5,000 units placed worldwide. The Duet LEX is now the flagship DTV product, in use by major local, regional and national users. Both ESPN and Fox Sports have standardized on the LEX as the CG of choice for all major sporting events. The new HyperX is a hybrid platform, accepting both DTV and HDTV plug-in cards, enabling a smooth migration path from DTV to full HDTV without replacing the frame. Content may be created for both formats simultaneously, and can be played back on the two separate devices, or a single HyperX independently. Duet uses Lyric, our content creation and play-out software, to compose messages and play back content. The open architecture of the Duet and Lyric packages has enabled us to introduce additional scalable, cost effective product solutions to the Duet family, from low costs CG's to fully integrated systems.

Chyron Aprisaâ Clip/Stillstore Systems: Chyron's Aprisa family enables clip, still and video graphics management. The Aprisa family provides an extensive line of high-quality still stores, clip stores, clip/still stores, video graphics servers and storage area network systems. These devices are used to provide moving backgrounds, "over-the-shoulder" shots for news, and stills (slides) for news and sports. Aprisa systems have sophisticated data base functions to search and retrieve thousands of images quickly and enable those images and clips to be instantly recalled, or played out in sequence through internal or external playlists. Both Aprisa and Duet systems seamlessly integrate to produce a total graphics workflow process that ranges from creation, to refinement, to approval and to on-air playout. Real-time interoperability and universal media access helps propel content through the system.

Software Products

The Company's graphics systems operate primarily with two main programs: Lyric and CAL (Chyron Application Library), plus a number of third party developed applications.

Lyric: Lyric software provides a highly advanced graphics creation and playback application that is standard with every Duet system. In addition to Lyric's powerful graphics capabilities, the advantage of Lyric software is that it functions separately from Duet hardware allowing continuous graphic creation. Lyric is compatible with all Windows^®XP/NT/2000 computers. Using Lyric, many graphic artists are able to create impressive 2D/3D graphics off-line for later transfer to Duet for broadcast-quality playback. Using Lyric, content can be created in one location and moved by LAN or WAN to another device or facility, no matter what the location. Lyric uses standard Windows network protocols and imports many different types of files, adding to its exceptional flexibility. Based on Chyron's experience in broadcast graphics, Lyric acts as a foundation for media content creators: intuitive and agile operation, powerful flexibility, hardware transparent, interoperable with many third-party graphics applications and technologies and designed from inception to accommodate future enhancements.

CAL: The Chyron Application Library is a powerful application programming interface ("API") used to create customized, real time, high quality broadcast graphics applications for Duet SD and HD platforms. For example, continuous data feeds of financial, news, sports or other information is easily transformed into rolls and crawls through CAL's data spooler. CAL's compound 3D animation engine provides built-in and custom data transition effects to create uniquely engaging displays such as interactive viewer feedback from Internet polls.

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Chyron MOS: MOS (Media Object Server) is a standard television station newsroom protocol that provides thumbnails and templates enabling journalists to enter character generator titling text while viewing the actual graphics that will be used. Chyron MOS consists of a MOS-compliant activeX client control interface connected to the Duet and Aprisa range of products. Simple to use, yet powerful and flexible, Chyron MOS gives newsroom staff the ability to create and schedule template-based text and graphics for playout across Chyron's entire product line.

Interactive TV/Text Messaging: As the communication and information age continue to move forward, Chyron's Interactive TV ("iTV") acts as a key component that merges traditional television with interactive graphics, permitting consumers to interact with the programming aspect. Interactive TV allows consumers to vote in live polls, access entertainment/sports/news headlines, chat live with other viewers, participate in t-commerce, browse the Web or access e-mail. Chyron has also developed and deployed several SMS ("short message service") text-to-air applications that enable cell phone users to vote or respond to various criteria. The responses are tabulated, then displayed on-air using a CAL application. This technology was recently used for the "Big Brother" series in the U.K.

Sales and Marketing

We market our products and systems to traditional broadcast, production and post-production facilities, government agencies, educational institutions and telecommunications and corporate customers. In order to maintain and increase awareness of our products, we display at the major domestic and international trade shows of the broadcast and post production segments. In the U.S., we exhibit at the NAB Convention and other smaller trade shows. We also exhibit at the International Broadcasters Convention (IBC) in Europe and other smaller trade shows internationally. At these smaller shows we exhibit either directly or in partnership with our dealers.

Product promotion is also achieved through direct-mail campaigns, e-newsletters and advertisements placed in relevant journals. Due to our long standing reputation as an innovator in the broadcast graphics market, our views are sought out and articles are often published in trade journals and papers presented at technical conventions by our engineering staff, reinforcing our technical credentials.

Sales of our products in the U.S., U.K. and France are made through our direct sales personnel as well as dealers, independent representatives, systems integrators and OEMs. Sales of our products outside of these areas are made through dealers and sales representatives covering specific territories. Direct sales, marketing and product specialists serving our global markets act as links between the customer and our development teams. In 2003, we sold our products in 37 countries around the world.

Service, Support and Training

We offer comprehensive technical service, support and training to our customers through 24 hours per day, seven days per week, 52 weeks per year access to trained service and support

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professionals. Scalable and fixed duration training courses are also available. These range from one day to one week and consist of a mix of classroom discussions and hands-on training. We offer training courses for many of our products at our Melville, NY headquarters, a facility in Los Angeles, CA and at customer sites.

We provide our customers with installation assistance, hardware and software maintenance contracts and spare parts. We believe support contracts and a responsive spare parts supply facilitate customer satisfaction. Service is provided both domestically and internationally by us or through our appointed dealers and representatives. We also provide sales and service support to our dealers.

Warranty and Service

We generally provide warranties on all of our products for one year. There may be, in certain instances, exceptions to these terms. A provision is made to estimate the warranty cost in products sold based on historical actual results.

Research and Development

Our research and product development has primarily been focused on the revitalization and extension of our core products. During 2003, 2002 and 2001, we spent approximately $2.7 million, $2.2 million and $2.8 million, respectively, for research and development for new and existing products.

Manufacturing

Our final assembly, system integration and test operations are located in Melville, NY. We primarily use third-party vendors to manufacture and supply all of the hardware components and sub-assemblies. The Company relies on a limited number of suppliers for major hardware components. We are continually reviewing product specifications in order to diversify the sourcing of critical components. With our change from proprietary to open architecture, we use more "off-the-shelf" components than we have in the past. This not only permits us greater flexibility in sourcing of components, but provides better gross margins on our products through the attainment of lower costs through competitive sourcing and greater commonality of components among our products.

Customers

There are no customers that represent in excess of 10% of our consolidated revenues for 2003, 2002 or 2001.

Competition

The markets for our graphics products are highly competitive and are characterized by rapid technological change and evolving industry standards. Rapid obsolescence of products, frequent development of new products and significant price erosion are all features of the

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industry in which we operate. An FCC ruling requires U.S. broadcasters to utilize digital television ("DTV") transmission by 2006. If a similar requirement were to be imposed by other government agencies worldwide, it would require large future capital expenditures by the broadcast industry. Management believes the FCC's ruling has created an opportunity for us in the market place; however, our ability to capitalize on this opportunity in the past has been delayed due to slower than anticipated market acceptance and implementation of DTV transmission globally by broadcasters.

We are currently aware of several major and a number of smaller competitors. We believe our primary competitors are Pinnacle Systems Inc., Pixel Power Ltd., vizrt Ltd., and Inscriber Technology Corporation. Some of these companies have significantly greater financial, technical, manufacturing and marketing resources than we have. On a region-by-region basis, certain product categories or market segments in which our Company does or may operate, are dominated by established vendors.

Patents and Proprietary Rights

All of our products are proprietary in that we have the exclusive right to manufacture them. We sell our products directly and through third party dealers and agents under contractual arrangements with those third parties. Our success depends upon our ability to protect our proprietary intellectual property, technology and know-how and operate without infringing on the rights of others. We rely on a combination of methods to protect our proprietary intellectual property, technology and know-how, such as trade secret laws, copyright law, trademark law, patent law, contractual provisions, confidentiality agreements and certain technology and security measures.

Our registered trademarks are Chyron, Scribe, Chyron Scribe, Chyron Scribe Junior, Chyron SuperScribe, iNFiNiT!, MAX!>, MAXINE!, CODI, Duet, I², Chyron Care, Intelligent Interface, Intelligent Interface (I²), CMX, CMX AEGIS, CMX OMNI, Aurora and Lyric. We also have rights in trademarks and service marks that are not federally registered. We do not have registered copyrights on any of our intellectual property.

While we do not have any significant patents granted for our current products, we have two important patents pending on our Duet architecture and our interactive TV authoring software applications.

Government Regulation

The telecommunications and television industries are subject to extensive regulation in the United States and other countries. For example, the FCC has issued regulations relating to shielding requirements for electromagnetic interface in electronic equipment. Our products are in compliance with these regulations. Furthermore, television operators are subject to extensive government regulation by the FCC and other federal and state regulatory agencies.

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Employees

As of December 31, 2003, we had 84 employees, comprised of 21 in sales and marketing, 22 in research and development, 14 in manufacturing and testing, 14 in customer support, service and training, and 13 in finance, management information systems and administration. None of these employees are represented by a labor union. We also employ contract personnel for specific functions or expertise. The number of contract hires fluctuates according to our requirements.

ITEM 2. PROPERTIES

The executive offices and principal office of our Company is located in Melville, New York, pursuant to a lease that expires on June 30, 2009. This facility consists of approximately 47,000 square feet and is used for manufacturing, research and development, marketing and the executive offices. Management believes that this facility is suitable for our existing operations and does not foresee the need for any significant expansion of our current facility.

ITEM 3. LEGAL PROCEEDINGS

From time to time we are involved in routine legal matters incidental to our business. In the opinion of management, the ultimate resolution of such matters will not have a material adverse effect on our financial position, results of operations or liquidity.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

During the fourth quarter of the year ended December 31, 2003, there were no matters submitted to a vote of the Chyron shareholders through the solicitation of proxies or otherwise.

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PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SECURITY HOLDERS MATTERS

Our common stock is quoted on the OTC Bulletin Board under the symbol "CYRO." The following table sets forth, for the periods indicated, the high and low reported bids as quoted on the OTC Bulletin Board. The over-the-counter market quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission, and may not necessarily represent actual transactions.

Price Range of Common Stock

	High	Low
Year ended December 31, 2003
Fourth quarter	$0.51	$0.29
Third quarter	0.55	0.30
Second quarter	0.35	0.15
First quarter	0.32	0.16

Year ended December 31, 2002
Fourth quarter	$0.30	$0.24
Third quarter	0.39	0.23
Second quarter	0.72	0.31
First quarter	0.51	0.22

On March 1, 2004, the closing price of our common stock as reported on the OTC Bulletin Board was $0.44 and the approximate number of holders of record of our common stock was 5,071.

We have not declared or paid any cash dividend since November 27, 1989. We currently plan to retain our future earnings, if any, for use in the operation and expansion of our business and do not anticipate paying cash dividends on the common stock in the foreseeable future.

During late 1998 and 1999 we raised $7.7 million through the issuance of Series A and Series B 8% Subordinated Convertible Debentures ("Series A and Series B Debentures), due December 31, 2003, to certain persons and entities, including certain directors, affiliates and shareholders of the Company. The Series A Debentures, which totaled $1.2 million, paid interest quarterly and were convertible, at any time, at the option of the holders thereof, into common stock of the Company at a conversion price of $2.466 per share. Under the original terms, the Series B Debentures, which totaled $6.5 million, were convertible, at any time, at the option of the holders thereof, into common stock of the Company at a conversion price of $1.625 per share. Interest on the Series A and Series B Debentures was payable quarterly and may be paid by increasing the amount of principal owed thereunder.

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On December 17, 2001, the terms of the existing Series A and Series B Debentures were amended to extend the maturity date from December 31, 2003 to December 31, 2004, increase the interest rate from 8% to 12%, and provide that until December 31, 2004, interest may be paid in the form of additional debentures, or in cash, at our sole option. On February 28, 2002, our board of directors resolved to pay interest on the Series A and Series B Debentures only in the form of additional debentures. Interest expense attributable to Series A and Series B Debentures totaled $1.2 million, $1.1 million and $0.7 million in 2003, 2002 and 2001, respectively.

In connection with the amendment to the Series A and Series B Debentures, we issued warrants to holders of the amended Series A and Series B Debentures to purchase an aggregate of 861,027 shares of common stock of the Company at an exercise price equal to $0.35 per share. The fair value of the warrants of $0.13 million has been reflected as a discount to the related obligation, and will be amortized as additional interest expense over the life of the debenture. The warrants were valued using the Black-Scholes pricing model using the closing market price and the risk-free interest rate on their issue date. During 2003 and 2002 amortization expense was $0.04 million. The warrants were vested immediately and are exercisable through December 31, 2004.

On December 31, 2003, we closed on an exchange offer to holders of Series A and Series B Debentures. Holders who accepted the offer exchanged Series A and Series B Debentures representing a December 31, 2003 book value of $1.95 million in return for a total of discounted cash payments of $1.04 million and 853,816 shares of common stock of the Company. The exchange resulted in cancellation of approximately 18.3% of the total of the Series A and Series B Debentures at their December 31, 2003 book value with $8.7 million of the debentures still outstanding. The Company recorded a gain on extinguishment of debt, in accordance with SFAS No. 15, "Accounting by Debtors and Creditors for Troubled Debt Restructuring" ("SFAS No. 15"), in its fourth quarter of 2003 of $0.6 million. The gain from the transaction resulted in a decrease to the net loss per common share of $0.02 for the year ended December 31, 2003.

On February 27, 2004, we closed on a second exchange offer whereby Series A and B Debentures of $8.7 million ($8.8 million at January 31, 2004, including accrued paid in kind interest) were exchanged for $3.8 million in cash, and $2.3 million for new Series C Subordinated Convertible Debentures ("Series C Debentures") and $2.3 million for new Series D Subordinated Convertible Debentures ("Series D Debentures"). The Series C Debentures bear interest annually at 7%, payable in kind, will mature December 31, 2005 and can be converted to common stock at a per share conversion price of $1.50. The Series D Debentures bear interest annually at 8%, payable in kind, will mature December 31, 2006 and carry a per share conversion price of $0.65. In accordance with SFAS No. 15, no gain will be recorded on this transaction. Rather, interest expense will be adjusted prospectively in a manner to create a constant effective rate.

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At December 31, 2003, the following warrants to purchase shares of our common stock were outstanding:

Warrants	Exercise Price	Expiration Date
123,631	$1.625	9/6/2004
60,000	1.120	3/29/2005
60,000	6.500	4/10/2005
151,914	6.500	4/11/2005
861,027	0.350	12/31/2004

The remaining information called for by this item relating to "Securities Authorized for Issuance under Equity Compensation Plans" is reported in footnote 14 of the Consolidated Financial Statements for the year ended December 31, 2003 appearing in this Annual Report on Form 10-K.

ITEM 6. SELECTED FINANCIAL DATA

You should read the selected consolidated financial data presented below in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our consolidated financial statements and the related notes appearing in this Annual Report on Form 10-K. The historical results are not necessarily indicative of the results to be expected in any future period. Statement of Operations Data has been restated to reflect the operations of our Pro-Bel Subsidiary as a discontinued operation.

SUMMARY FINANCIAL DATA

(In thousands, except per share amounts)

	Year Ended December 31,
	2003	2002	2001	2000		1999
Statement of Operations Data:
Net sales	$19,369	$21,063	$19,076	$26,905		$28,054
Goodwill impairment, restructuring
and unusual charges			8,570			6,681
Provision for income taxes						13,451
Loss from continuing operations	(1,944)	(2,083)	(24,424)	(5,203)		(27,173)
Net loss	(393)	(3,044)	(33,667)	(11,908)		(29,784)
Net loss per share - basic and diluted:
Continuing operations	$(0.05)	$(0.05)	$(0.62)	$(0.15)		$(0.85)
Discontinued operations	0.04	(0.03)	(0.24)	(0.19)		(0.08)
	$(0.01)	$(0.08)	$(0.86)	$(0.34)		$(0.93)
Weighted average number of shares outstanding
- basic	39,688	39,564	39,352	34,824		32,084
- diluted	39,815	39,564	39,352	34,824		32,084

	As of December 31,
	2003	2002	2001		2000	1999
Balance Sheet Data:
Cash and cash equivalents	$6,968	$ 2,217	$ 4,342		$15,332	$ 5,453
Working capital	7,957	2,441	4,366		31,019	17,761
Total assets	14,175	27,987	33,899		65,828	58,381
Long-term obligations	10,622	14,367	16,027		18,602	21,622
Shareholders' (deficit) equity	(1,581)	(2,363)	313		32,961	22,512

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SELECTED QUARTERLY DATA

(Dollars in thousands except per share amounts)

			Net Profit	Per Share of Common Stock(1)
	Net Sales	Gross Profit	(Loss)	Basic	Diluted
2003
First Quarter	$ 5,299	$ 3,046	$ 85	$ 0.00	$ 0.00
Second Quarter	4,991	2,701	(415)	(0.01)	(0.01)
Third Quarter	3,728	2,005	(2,172)	(0.05)	(0.05)
Fourth Quarter	5,351	3,250	2,109	0.05	0.05
	$19,369	$11,002	$ (393)	$(0.01)	$(0.01)

2002
First Quarter	$ 4,817	$ 2,744	$ (820)	$ (0.02)	$ (0.02)
Second Quarter	5,879	2,800	(987)	(0.02)	(0.02)
Third Quarter	4,806	2,404	(907)	(0.02)	(0.02)
Fourth Quarter	5,561	2,592	(330)	(0.01)	(0.01)
	$21,063	$10,540	$(3,044)	$ (0.08)	$ (0.08)

(1) The loss per share in each quarter is computed using the weighted-average number of shares outstanding during that quarter while the full year is computed using the weighted-average number of shares outstanding during the year. Thus, the sum of the four quarters does not equal the full-year amount.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

General

Management's Discussion and Analysis of Financial Condition and Results of Operations discusses our consolidated financial statements for the periods indicated, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an on-going basis, management evaluates its estimates and judgments, including those related to product returns, bad debts, inventories, revenue recognition, investments, intangible assets, income taxes, financing, operations, warranty obligations, restructuring costs, retirement benefits, forecasts of 2004 results, contingency plans, cash requirements and contingencies and li tigation. Management bases its estimates and judgments on historical experience and on various other factors. These include, but are not limited to, pricing pressures, customer requirements, supply issues, manufacturing performance, product development and general market conditions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. Results for the periods reported herein are not necessarily indicative of results that may be expected in future periods.

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On November 6, 2003, we completed the sale of the entire issued share capital of Chyron UK Holdings Limited, including our operating subsidiary, Pro-Bel Limited. In effect, this eliminated the entire operations of the Signal Distribution and Automation segment and only the Graphics Division remains. Consequently, this segment has been eliminated and the operating results are reported as discontinued operations. Discussion of prior year results have been restated to reflect this segment as a discontinued operation.

Critical Accounting Policies

Management believes the following critical accounting policies, among others, comprise the more significant judgments and estimates used in the preparation of our consolidated financial statements. 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 were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances and/or the deferral of revenue may be required. We provide for the estimated cost of product warranties at the time revenue is recognized. While we engage in extensive product quality programs and processes, including actively monitoring and evaluating the quality of our component suppliers, our warranty obligation is affected by product failure rates, material usage and service delivery costs incurred in correcting a product failure. Should actual product failure rates, material usage or service delivery costs differ from our estimates, revisions to the estimated warranty liability may be required.

We write-down our inventory for estimated obsolescence or unmarketable inventory equal to the difference between the cost of inventory and the estimated market value based upon assumptions about future demand and market conditions. Technology changes and market conditions may render some of our products obsolete and additional inventory write-downs may be required. If actual, future demand or market conditions are less favorable than those projected by management, additional inventory write-downs may be required.

We hold interests in companies having operations or technology in areas within or adjacent to our strategic focus, one of which is publicly traded whose share prices are highly volatile and one of which is privately held whose value is difficult to determine. We record an investment impairment charge when we believe an investment has experienced a decline in value that is other than temporary. Future adverse changes in market conditions or poor operating results of underlying investments could result in losses or an inability to recover the carrying value of the investments that may not be reflected in an investment's current carrying value, thereby possibly requiring an impairment charge in the future.

We record a valuation allowance to reduce our deferred tax assets to the amount that we believe is more likely than not to be realized. Additionally, should we determine that we would be able to realize our deferred tax assets in the future in excess of our net recorded amount, an adjustment to the deferred tax assets would increase income in the period this determination was made.

Net sales includes revenue derived from sales of products and services. We recognize revenue when it is realized or realizable and earned, when we have persuasive evidence of an

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arrangement, the product has been shipped or the services have been provided to the customer, the sales price is fixed or determinable and collectibility is reasonably assured. Revenue is reduced for estimated customer returns and other allowances.

Revenue from product sales is recognized when title has passed (usually at the time the product is shipped to the customer) and there are no unfulfilled company obligations that affect the customer's final acceptance of the arrangement. Cost of these obligations, if any, would be accrued when the corresponding revenue is recognized. Revenue from one-time charge licensed software is recognized at the inception of the license term.

Revenue associated with long term contracts is recognized using the percentage-of-completion method of accounting. In using this method, we record revenue by reference to the costs incurred to date and the estimated costs remaining to fulfill the contracts or based upon the completion of certain tasks. Provisions for losses are recognized during the period in which the loss first becomes apparent.

Revenue from time and material service contracts is recognized as the services are provided. Revenue from maintenance contracts is recognized ratably over the contractual period.

At times we enter into transactions that include multiple element arrangements, which may include any combination of hardware, services or software. When some elements are delivered prior to others in an arrangement, revenue is deferred until the delivery of the last element unless there is all of the following:

Vendor-specified objective evidence of fair value of the undelivered elements.

The functionality of the delivered elements is not dependent on the undelivered elements.

Delivery of the delivered element represents the culmination of the earnings process.

Year Ended December 31, 2003 Compared to Year Ended December 31, 2002

Net Sales. Revenues for the year ended December 31, 2003 were $19.4 million, a decrease of $1.7 million, or 8% from the $21.1 million reported for the year ended December 31, 2002. The decline in revenues is directly related to a lower level of sales in international markets. Revenue outside the U.S. was $5.1 million in 2002 and declined by $3.3 million to $1.8 million in 2003. This was offset by an increase in 2003 in sales within the U.S. of $1.6 million over the level in 2002. In 2002, we were the recipient of several large awards for major installations of equipment in Canada, Switzerland and France which did not recur in 2003. In addition, the distraction on the international sales force, due to the sale of our Pro-Bel Division in November 2003, contributed to the 2003 decline. Beginning in 2004, we have a sales force that is dedicated to graphics products in place in key international locations.

Gross Profit. Gross margins for the year ended December 31, 2003 and 2002, were 57% and 50%, respectively. The migration of the Company's products from a closed, proprietary structure to one that is open, and Windows^®-based, has increased the level of off-the-shelf components that are used which has substantially lowered material costs. In addition, due to the numerous products within a product family, from low cost CG's to fully integrated systems, there

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is a high degree of inter-changeability of component parts that has also enabled us to leverage material costs. Overhead costs have also been reduced as a result of tighter cost controls.

Selling, General and Administrative Expenses. Selling, general and administrative (SG&A) expenses decreased by $0.4 million, or 5%, to $8.1 million in 2003, compared to $8.5 million in 2002. This decline is directly attributable to reductions in selling and marketing expenses, specifically travel, commissions (which are based on sales levels) and advertising.

Research and Development Expenses. Research and development (R&D) costs increased during 2003 compared to 2002 by $0.5 million or 23% to $2.7 million in 2003, compared to $2.2 million in 2002. During 2003 we enhanced our efforts in this area to address the changing requirements for products in the marketplace - we hired six additional developers, increased the use of outside consultants and incurred additional costs associated with hardware parts evaluation. Our focus will be to leverage our technical expertise by expanding our current line of products to suit the changing needs of our clients in addition to applying current technology to new products aimed at markets that have not traditionally been a focus of the Company.

Interest income and expense. Overall interest expense was relatively flat year over year and amounted to $2.05 million in 2003 as compared to $2.01 million in 2002. We experienced increases in interest expense of approximately $0.1 million relating to our Series A and Series B Debentures and Senior Notes because we did not pay any interest in cash. Instead, interest was paid in the form of additional debentures ("payment in kind") and accrued on any unpaid balance. Interest declined by $0.07 million relative to our bank debt as principal balances declined throughout the year until the balance on the term loan was paid in full in September 2003 and the balance on our revolving line of credit was paid in full in November 2003 with the proceeds from the sale of our Pro-Bel subsidiary.

Other income and expense, net. The components of other income and expense, net are as follows (in thousands):

2003

2002

Gain on extinguishment of debt

$(579)

Writedown of marketable security

211

Gain on sale of equity securities

(63)

Writedown of Trilogy

624

Foreign exchange transaction gain

(44)

$(55)

Other

1

13

$ 150

$ (42)

On December 31, 2003, we closed on an exchange offer to holders of Series A and Series B Debentures whereby debentures, representing a December 31, 2003 book value of $1.95 million, were exchanged for a total of discounted cash payments of $1.04 million and 853,816 shares of common stock of the Company. The exchange resulted in cancellation of approximately 18.3% of the total of the Series A and Series B Debentures at their December 31, 2003 book value with $8.7 million of debentures still outstanding. The Company recorded a gain on extinguishment of debt in its fourth quarter of 2003 of $0.6 million.

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During the first quarter of 2003 we evaluated our investment in equity securities of vizrt Ltd. ("vizrt"), that was trading below our cost for a period of time, and determined that the decline in the market value was other than temporary. Accordingly, the security was written down to its current fair value and a loss of $0.2 million was charged to earnings. During the fourth quarter of 2003 the Company sold a portion of its equity investment in vizrt for a gain of $0.06 million.

During the quarter ended September 30, 2003 the Company determined that its remaining investment in, and a note receivable from Trilogy was at risk and fully reserved for such assets. This resulted in a charge of approximately $0.6 million and was recorded in the third quarter of 2003.

On November 6, 2003, we completed the sale of Chyron UK Holdings Limited, including its operating subsidiary, Pro-Bel Limited. The Pro-Bel division specialized in the development of routers and associated equipment enabling the management and delivery of high bandwidth digital video, digital audio and other data signals. It also provided high-end transmission automation and media asset management solutions. In effect, this eliminated the entire operations of the Signal Distribution and Automation segment and only the Graphics Division remains. As a result, the Company now focuses completely on its core-competency, the development of real-time graphics solutions for its worldwide professional video and TV broadcast customers. Consequently, this segment has been eliminated and the operating results are reported as discontinued operations. Prior year Statements of Operations and Cash Flows have been restated to reflect this segment as a discontinued operation.

Year Ended December 31, 2002 Compared to Year Ended December 31, 2001

Revenues increased to $21.1 million in 2002 as compared to $19.1 million for 2001. This increase is primarily due to greater customer acceptance in the U.S. and European marketplaces of our Windowsâ - -based Duet and Aprisa Clip/Stillstore products, as these have replaced the legacy iNFiNiT! products. Revenues associated with these products grew by 41% in 2002 as compared to 2001 and offset the decline of $2 million in revenues of iNFiNiT! family products. The newer Duet and Aprisa products provide similar functionality but improved performance as compared to the legacy iNFiNiT! family of products that they are replacing. The average selling prices of the newer Duet and Aprisa products are approximately 60% of the average selling prices of the older iNFiNiT! family of products. This, coupled with a market that is growing, but not appreciably, and a difficult economic environment in 2002 and 2001 in the U.S., which is the primary market for graphics products, has put pressure on graphics products sales. While it is difficult to forecast what the future impact on sales will be, the newer Duet and Aprisa products appear to be gaining increased recognition in the broadcast market.

Gross Profit. Gross margins for the year ended December 31, 2002 and 2001, were 50% and 16%, respectively, inclusive of a $3.2 million write-down of inventory in 2001. Excluding the inventory write-down, the gross margin in 2001 was 33%.

Since we utilize semiconductor surface mount component technology more extensively than we had in the past, electronic assembly is outsourced to specialized subcontract

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manufacturers. This technology is in constant and rapid change and would require large capital expenditures if we were to manufacture on our own with surface mount technology. In consequence, we rely on high volume subcontract manufacturers to produce inventory items rather than to manufacture in-house. As a result, effective January 1, 2002, we no longer allocated selling, general and administrative (SG&A) and research and development (R&D) costs to manufacturing as these will be incurred by third party manufacturers. Throughout 2001, we allocated portions of R&D and SG&A costs of approximately $1 million to cost of sales and overhead applied to inventory, which had the effect of lowering gross margins in 2001 by approximately 5%.

Improvement in margins in 2002 were also attributable to lower fixed overhead costs attributable to our cost reduction efforts implemented during 2001, manufacturing efficiencies relative to Aprisa products, and that in 2001 the iNFiNiT! products experienced lower margins due to greater discounting as they neared the end of their product life cycle and began to be replaced by the newer Duet and Aprisa products.

Selling, General and Administrative Expenses. Selling, general and administrative (SG&A) expenses decreased by $6.4 million, or 43%, to $8.5 million in 2002, compared to $14.9 million in 2001. SG&A expenses in the fourth quarter of 2001 were sharply reduced as part of a restructuring plan, which eliminated sales and marketing staff and reduced other operating costs. The effects of these actions were substantially realized in 2002. Included in 2001 were approximately $5 million in expenses related to our former streaming services business that was discontinued in the second quarter of 2001.

Research and Development Expenses. Research and development (R&D) costs decreased during 2002 compared to 2001 by $0.6 million or 21% to $2.2 million in 2002, compared to $2.8 million in 2001 primarily as a result of headcount reduction in late 2001. Beginning in 2001 and continuing in 2002, as we launched our new products and refocused on our core competencies, it became apparent that our expenditures on R&D could be reduced to a level commensurate with our projected product needs. R&D efforts were refocused on near term products rather than on longer term products for which no definable future product benefits were apparent.

Goodwill impairment, restructuring and unusual charges. During 2001, we experienced a slowdown in revenues in our graphics business. In addition, revenues in our streaming services business were significantly lower than anticipated and we virtually eliminated any additional investment in that business for the foreseeable future. Consequently, during the second quarter of 2001, we approved restructuring plans to realign our organization, reduce operating costs, and curtail any spending associated with the pursuit of streaming services. This restructuring involved the reduction of employee staff by approximately 40 positions and the closure of our New York and London offices and two satellite offices. As a result of these circumstances and events, we considered a variety of factors and determined that the carrying amount of the excess of purchase price over net tangible assets acquired and other long-lived assets associated with the streaming services business were in excess of their fair value. Impairment charges associated with the streaming services business were recorded for the write down of the excess of purchase price over net tangible assets acquired, leasehold improvements, software, computers and other

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equipment. As a result, we recorded restructuring and other unusual charges totaling $8.3 million in the second quarter of 2001.

In the fourth quarter of 2001, we implemented a restructuring plan to size our cost structure in line with anticipated revenues. Pursuant to the plan, we implemented staff reductions of individuals for an overall cost of $0.3 million.

Interest income and expense. Overall interest expense increased in the year ended December 31, 2002 by $0.7 million to $2.0 million. This increase results from the additional costs associated with the issuance of senior notes as well as higher interest rates resulting from the restructuring of our convertible debentures and issuance of warrants in December 2001. Additionally, amortization of debt issue and warrant costs increased interest expense. Interest income declined by $0.2 million in the year ended December 31, 2002 due to lower cash balances available for investment purposes.

Other income and expense, net. The components of other income and expense are as follows (in thousands):

2002

2001

Loss on sale of investments

$  328

Foreign exchange transaction gain

$ (55)

(93)

Other

  13

(24)

$ (42)

$  211

During 2001, we realized a loss of $0.3 million on the sale of approximately 60% of our marketable securities of vizrt Ltd.

Liquidity and Capital Resources

During 2003 net cash of $0.9 million was provided by operations as compared to $0.3 million in 2002. The generation of cash from operations results primarily from the realization of the net loss of $0.4 million offset by non-cash expenses totaling $0.8 million and net changes in operating assets and liabilities of $0.5 million.

On November 6, 2003, we completed the sale of the entire issued share capital of our wholly owned subsidiary, Chyron UK Holdings Limited, including our operating subsidiary, Pro-Bel Limited. In effect, this eliminated the entire operations of the Signal Distribution and Automation segment and only the Graphics Division remains. As a result, the Company now focuses completely on its core-competency, the development of real-time graphics solutions for its worldwide professional video and TV broadcast customers. The gross proceeds were approximately $15.3 million, before the required settlement of Pro-Bel bank obligations of approximately $3.4 million and related transaction costs of approximately $1.4 million. The Company realized a gain on sale of $2.6 million that was recorded in the fourth quarter of 2003.

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The net proceeds resulting from the sale, totaling $10.5 million, was used to pay down a portion of our indebtedness, with the balance retained for working capital purposes. In November 2003, we repaid the remaining balance on our outstanding indebtedness with our U.S. bank and terminated our borrowing arrangement. Total cash used to settle U.S. bank obligations totaled $3.7 million in 2003. On December 31, 2003, we used $2.5 million to pay off our Senior Subordinated Notes that matured on such date. On December 31, 2003, we closed on an exchange offer with holders of Series A and B Debentures whereby approximately 18.3% of debentures totaling $1.95 million were exchanged for discounted cash payments of $1.04 million and 853,816 shares of common stock. This resulted in a gain of $0.6 million, in accordance with SFAS No. 15, which was included in our fourth quarter of 2003 consolidated statement of operations. Total cash used to settle Series A and Series B Debentures and Senior Notes tota led $3.7 million in 2003. Consequently, at December 31, 2003, the Company's outstanding indebtedness, consisting solely of Series A and B Debentures, totaled $8.7 million.

On February 27, 2004, the Company closed on a second exchange offer with a majority of the remaining Series A and B Debenture holders whereby $8.8 million (balance on January 31, 2004, which included accrued interest) of debentures were exchanged for $3.8 million in cash and new Series C and D Debentures totaling $4.6 million were issued. The Series C Debentures, of $2.3 million, bear interest annually at 7%, payable in kind, and will mature December 31, 2005. The Series D Debentures bear interest annually at 8%, payable in kind, and will mature December 31, 2006. Cash and cash equivalents at February 29, 2004, was $2.9 million and total indebtedness, consisting of Series C and Series D Debentures totaled $4.7 million. In accordance with SFAS No. 15, no gain will be recorded on this transaction. Rather, interest expense will be adjusted prospectively in a manner to create a constant effective rate.

Chyron's contractual obligations as of December 31, 2003, are as follows (in thousands):

Payments Due by Period

Less Than

One to

Three to

Contractual Obligations

Total

One Year

Three Years

Five Years

Series A and Series B

  Debentures (1)

$ 8,677

$8,677

Other long-term obligations

643

643

Capital lease obligations

19

11

$      8

Operating lease obligations

  2,357

   414

1,264

$ 679

Total

$11,696

$9,745

$1,272

$ 679

(1) On February 27, 2004, we exchanged these Series A and Series B Debentures (value of $8.8 million at January 31, 2004, including accrued paid in kind interest) for $3.8 million in cash and $2.3 million for new Series C Debentures that mature December 31, 2005 and $2.3 million in Series D Debentures that will mature December 31, 2006.

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We provide graphics products to the broadcast industry for use in digital television. Our future growth and success will depend to a significant degree on the continued growth of various markets that use our products. During 2001 we effected a restructuring that involved reductions in staff and overhead, as well as reduced capital expenditures and discretionary spending, so as to reduce costs and expenses and reduce cash outflows in response to lower revenues. We do not currently intend to effect another restructuring as we did in 2001 unless a downturn in sales necessitates it. We operate in a rapidly changing environment and must remain responsive to changes as they occur. In the event that revenues are significantly below 2004 forecasted revenues we believe we have the ability to reduce or delay discretionary expenditures, including capital purchases, and further reduce headcount, according to our contingency plan so that we will have sufficient cash resources through December 31, 2004 . However, there can be no assurance that we will be able to adjust our costs in sufficient time to respond to revenue shortfalls, should that occur.

In preparing contingency plans for a lower level of 2004 sales than we are currently forecasting, we have re-examined our cost structure and prepared a contingent restructuring plan that recommends, in the event it is necessary, to reduce spending in staffing, travel, trade shows, advertising, professional fees, equipment, and bonuses, among other items. However, there can be no assurance we would be able to execute the plans in adequate time to provide a significant immediate or short-term benefit and if implemented, could have an adverse effect on our ability to conduct business.

We believe that cash on hand, net cash to be generated in the business, and availability under our new line of credit, will be sufficient to meet our cash needs for the next twelve months if we are able to achieve our planned results of operations. However, there can be no assurance we will be able to achieve our plan.

Impact of Inflation and Changing Prices

Although we cannot accurately determine the precise effect of inflation, we have experienced increased costs of materials, supplies, salaries and benefits and increased general and administrative expenses. We attempt to pass on increased costs and expenses by developing more useful and cost-effective products for our customers that can be sold at more favorable profit margins.

Industry Transition to Digital Standards

Conversion to a digital standard in the U.S., and similar standards internationally, will produce an opportunity to appropriately positioned companies involved in the broadcast industry and related business; however, this change has caused uncertainty, hesitation and indecision for broadcasters and other customers in their decisions on capital spending. The delay in capital spending by broadcasters has affected the level of our sales. The method and timing of broadcasters' conversion to digital television is very important to our future operating results.

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Recent Accounting Pronouncements

In November 2002, the Emerging Issues Task Force (or EITF) of the Financial Accounting Standards Board (or FASB) issued EITF 00-21, "Revenue Arrangements with Multiple Deliverables," which addresses certain aspects of the accounting for arrangements that involve the delivery or performance of multiple products, services and/or rights to use assets. Under EITF 00-21, revenue arrangements with multiple deliverables should be divided into separate units of accounting if the deliverables meet certain criteria, including whether the fair value of the delivered items can be determined and whether there is evidence of fair value of the undelivered items. In addition, the consideration should be allocated among the separate units of accounting based on their fair values, and the applicable revenue recognition criteria should be considered separately for each of the separate units of accounting. EITF 00-21 is effective for revenue arrangements we enter into after June 30, 2003. We contin uously evaluate the impact of EITF 00-21 on revenue arrangements we enter into which did not have a material impact on the Company's consolidated financial statements.

In January 2003, the FASB issued FIN 46, "Consolidation of Variable Interest Entities" and a revised interpretation of FIN 46 (FIN 46-R) in December 2003 which addresses consolidation of variable interest entities. FIN 46 expands the criteria for consideration in determining whether a variable interest entity should be consolidated by a business entity, and requires existing unconsolidated variable interest entities to be consolidated by their primary beneficiaries if the entities do not effectively disperse risks among parties involved. This interpretation applies immediately to all arrangements entered into after January 31, 2003. Since January 31, 2003, the Company has not invested in any entities it believes are variable interest entities for which the Company is the primary beneficiary. For arrangements entered into prior to February 1, 2003, the Company is required to adopt the provisions of FIN 46-R in the first quarter of 2004. The Company does not believe the adoption of FIN 46-R will have a material impact on its financial statements.

In April 2003, the FASB issued SFAS No. 149. SFAS No. 149 amends and clarifies financial accounting and reporting for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities under SFAS No. 133. SFAS No. 149 requires that contracts with comparable characteristics be accounted for similarly. In particular, SFAS No. 149 (1) clarifies under what circumstances a contract with an initial net investment meets the characteristic of a derivative discussed in paragraph 6(b) of SFAS No. 133, (2) clarifies when a derivative contains a financing component, (3) amends the definition of an underlying to conform it to language used in FIN No. 45, "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others," and (4) amends certain other existing pronouncements. The provisions of SFAS No. 149 are effective for contracts entered into or modified after June 30, 2003. Th e adoption of SFAS No. 149 did not have a material impact on the Company's results of operations or financial condition.

In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity." SFAS No. 150 establishes standards for how an issuer classifies and measures certain financial instruments with

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characteristics of both liabilities and equity. It requires that an issuer classify a financial instrument that is within its scope as a liability (or an asset in some circumstances). The provisions of SFAS No. 150 are effective for financial instruments entered into or modified after May 31, 2003, and otherwise are effective at the beginning of the first interim period beginning after June 15, 2003. The adoption of SFAS No. 150 did not have any impact on the Company's results of operations or financial condition.

In December 2003, the Financial Accounting Standards Board ("FASB") issued a revised SFAS No. 132, "Employer's Disclosures about Pensions and Other Postretirement Benefits." The revised standard requires incremental pension and other postretirement benefit plan disclosures to financial statements and is designed to improve disclosure transparency. The adoption of this accounting standard did not have any effect on our results of operations or financial position.

Our Common Stock in 401(k) Plan

We have a 401(k) plan for U.S. employees into which we make a matching contribution in the form of our common stock equal to one-fifth of up to the first 10% of the compensation contributed by a participant. Prior to January 1, 2003, our Company match was in cash which was used to purchase our stock, whereas since January 1, 2003, we issue new, previously unissued shares. A participant in the plan has 19 investment choices, one of which is our common stock.

Transactions with Related Parties

During late 1998 and 1999 we raised $7.7 million through the issuance of Series A and Series B Debentures, due December 31, 2003. Certain directors, officers and 5% shareholders at that time acquired approximately 74% of these debentures. The Series A Debentures, which totaled $1.2 million, paid interest quarterly and were convertible, at any time, at the option of the holders thereof, into common stock of the Company at a conversion price of $2.466 per share. Under the original terms, the Series B Debentures, which totaled $6.5 million, were convertible, at any time, at the option of the holders thereof, into common stock of the Company at a conversion price of $1.625 per share. Interest was payable quarterly and may be paid by increasing the amount of principal owed thereunder.

On December 17, 2001, the terms of the existing Series A and Series B Debentures were amended to extend the maturity date of the Series A and B Debentures from December 31, 2003 to December 31, 2004, increase the interest rate from 8% to 12%, and provide that until December 31, 2004, interest may be paid in the form of additional debentures, or in cash, at our sole option. On February 28, 2002, our board of directors resolved to pay interest on the Series A and Series B Debentures only in the form of additional debentures. Interest expense attributable to Series A and B Debentures totaled $1.2 million, $1.1 million and $0.7 million in 2003, 2002 and 2001, respectively.

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The fair value of the warrants of $0.13 million has been reflected as a discount to the related obligation, and will be amortized as additional interest expense over the life of the debenture. The warrants were valued using the Black-Scholes pricing model using the closing market price and the risk-free interest rate on their issue date. During 2003 and 2002 amortization expense was $0.04 million. The warrants were vested immediately and are exercisable through December 31, 2004.

On February 27, 2004, we closed on a second exchange offer whereby Series A and B Debentures of $8.7 million ($8.8 million at January 31, 2004, including accrued paid in kind interest) were exchanged for $3.8 million in cash, and $2.3 million for new Series C Debentures and $2.3 million for new Series D Debentures. The Series C Debentures bear interest annually at 7%, payable in kind, will mature December 31, 2005 and can be converted to common stock at a per share conversion price of $1.50. The Series D Debentures bear interest annually at 8%, payable in kind, will mature December 31, 2006 and carry a per share conversion price of $0.65. All holders of Series C and Series D Debentures are beneficial owners of 5% or more of our common stock. In accordance with SFAS No. 15, no gain will be recorded on this transaction. Rather, interest expense will be adjusted prospectively in a manner to create a constant effective rate.

Beginning in 2001 and ending in February 2003, when he became the President and Chief Executive Officer of the Company, Mr. Michael Wellesley-Wesley, then a member of our board of directors, was paid $15,000 monthly for consulting services and was assigned a company automobile, for exploring strategic alternatives for the Company. During 2003, 2002 and 2001, the cost of consulting services approximated $0.03 million, $0.18 million and $0.09 million, respectively.

Mr. Henderson, a current Director and the Company's President and Chief Executive Officer until February 2003, was paid fees of $0.04 million, plus expenses, for consulting services in exploring strategic alternatives for the Company subsequent to his resignation.

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were approximately $0.7 million, $1.0 million and $1.3 million for the years ended December 31, 2003, 2002 and 2001, respectively.

Presently, we are the only major customer of Video Technics whose financial well being is dependent on our success with the Aprisa line. Being a privately-held and small company, there is no assurance that Video Technics will not face financial problems, thus being unable to meet its supply obligations and endangering the Aprisa product line for several months. Sales of Aprisa products represented 11%, 10% and 18% of sales in 2003, 2002 and 2001, respectively.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT

MARKET RISK

We are exposed to foreign currency and exchange risk in the normal course of business related to investments in our foreign subsidiaries and sales to foreign customers. For the years ended December 31, 2003, 2002 and 2001, sales to foreign customers were 9%, 24% and 19% of total sales, respectively. Substantially all sales generated outside of the U.S. are denominated in British Pounds Sterling, Euros and U.S. Dollars. The net impact of foreign exchange transactions was a gain of $0.04 million, a gain of $0.05 million and a gain of $0.09 million for the years ended December 31, 2003, 2002 and 2001, respectively. We record translation gain or loss as a separate component of other comprehensive income or loss.

Additionally, we are exposed to interest rate risk with respect to certain of our short-term and long-term debt that carries a variable interest rate. Rates that affect the variable interest on this debt include the Prime Rate and LIBOR. We have evaluated the foreign currency exchange risk and interest rate risk and believe that our exposure to these risks are not material to our near-term financial position, earnings or cash flows.

Factors Affecting Future Results

We cannot assure you that we will reach profitability because we have a history of losses.

We incurred significant losses from 1997 through 2003. Our accumulated deficit as of December 31, 2003 was $74.0 million. We cannot assure you that we will achieve profitability in any future periods, and you should not rely on our historical revenue or our previous profitability as any indication of our future operating results or prospects. In addition, as a result of the sale of our Pro-Bel division, our sales will be reduced to a level where it will be more difficult to absorb fixed overhead costs. If we continue to generate losses and do not generate sufficient cash, we will not have cash to maintain operations at current levels. In addition, we may need additional financing to sustain our operations in the future. There can be no assurance that additional financing will be available or if available that it will be on terms acceptable to us.

Our future operating results are likely to fluctuate and therefore may fail to meet expectations, which could cause our stock price to decline.

Our operating results have varied widely in the past and are likely to do so in the future. In addition, our operating results may not follow any past trends. Our future operating results

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will depend on many factors and may fail to meet our expectations for a number of reasons, including those set forth in these risk factors. Any failure to meet expectations could cause our stock price to significantly fluctuate or decline.

Factors that relate to our internal operations and could cause our operating results to fluctuate include:

the need for continual, rapid new product introductions,

changes in our product mix,

our inability to adjust our fixed costs in the face of any declines in sales,

successful execution of our strategy to develop and market products for the TV broadcasting markets, namely, character generators, video clip and stillstore and media management

the quality and market acceptance of new products, and

the timing and nature of selling and marketing expenses (such as trade shows and other promotions).

Factors that depend upon our suppliers and customers and could cause our operating results to fluctuate include:

the timing of significant product orders, order cancellations and reschedulings,

the availability of production capacity and fluctuations in the manufacturing yields at the facilities to which we subcontract our critical components,

the cost of raw materials and manufacturing services from our suppliers, and

the financial stability of our suppliers and customers.

Factors that are industry risks and could cause our operating results to fluctuate include:

intense competitive pricing pressures due to increased competition,

introductions of or enhancements to our competitors' products,

the cyclical nature of the industry, and

economic conditions affecting our customers and us.

Our day-to-day business decisions are made with these factors in mind. Although certain of these factors are out of our immediate control, unless we can anticipate and be prepared with contingency plans that respond to these factors, we will be unsuccessful in carrying out our business plan.

If we fail to successfully develop, introduce and sell new products, we may be unable to compete effectively in the future.

We operate in a highly competitive, quickly changing environment marked by rapid obsolescence of existing products. Our future success depends on our ability to develop, introduce and successfully market new products, including Duet products that replaced our existing iNFiNiT!, Max and Maxine product lines. To date, we have been selling our Duet

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products in increasing quantities, and we must continue to increase our sales or our business will suffer. If any of the following occur, our business will be materially harmed:

We fail to complete and introduce new product designs in a timely manner,

We are unable to have these new products manufactured according to design specifications,

Our customers do not perceive value in our new products and demand deep discounts,

Our sales force and independent distributors do not create adequate demand for our products, or

Market demand for our new products does not develop as anticipated.

If we are unable to keep up with rapid change in our industry, our business will not grow.

The markets for our products are characterized by rapidly changing technology, evolving industry standards and frequent new product introductions and enhancements. Due to technological advancements and changes in industry standards, our products may become obsolete or the prices at which we can sell them may decline. Future technological advances in the television and video industries may result in the availability of new products or services that could compete with our products or reduce the price of our existing products or services. The availability of competing or less expensive products could cause our existing or potential customers to fulfill their needs better and more cost efficiently with products other than ours.

For example, customers are beginning to use personal computers to edit graphics. This is a task that traditionally would have been completed on our lower-end stand-alone machines. We may not be successful in enhancing our products or developing, manufacturing or marketing new products that satisfy customer needs or achieve market acceptance. In addition, services, products or technologies developed by others may render our products or technologies uncompetitive, unmarketable or obsolete. Announcements of currently planned or other new product offerings by either our competitors or us may cause customers to defer or fail to purchase our existing products or services.

In addition, errors or failures may be found in our products. Such errors or failures could cause delays in product introductions and shipments or require design modifications that could adversely affect our competitive position. This could result in an increase in the inventory of our products. If we do not develop, on a timely basis, new products, and enhancements to existing products or correct errors should they arise, or if such new products or enhancements do not achieve market acceptance, our business, financial condition and results of operations may suffer. Furthermore, the trend toward the use of open systems may cause price erosion in our products, create opportunities for new competitors, allow existing competitors enhanced opportunities and limit the sale of our proprietary systems. Customers may also have unique product requirements such as support of foreign languages, which may be difficult and expensive for us to support and may have limited acceptability.

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We expend substantial resources in developing and selling our products, and we may be unable to generate significant revenue as a result of these efforts.

To establish market acceptance of our products, we must dedicate significant resources to research and development, production and sales and marketing. We experience a long delay between the time when we expend these resources and the time when we begin to generate revenue, if any, from these expenditures. Typically, this delay is one year or more. We record as expenses the costs related to the development of new products as these expenses are incurred. As a result, our profitability from quarter to quarter and from year to year may be materially and adversely affected by the number and timing of our new product introductions in any period and the level of acceptance gained by these products.

Our customers may cancel or change their product plans after we have expended substantial time and resources in the design of their products.

If one of our potential customers cancels, reduces or delays product orders from us or chooses not to release equipment that incorporates our products after we have spent substantial time and resources in designing a product, our business could be materially harmed. Even when customers integrate one or more of our products into their systems, they may ultimately discontinue the system that incorporates our products. System integrators whose products achieve customer acceptance may choose to replace our products with other products giving them higher margins or better performance.

If the digital video market does not grow, we will be unable to increase our revenues.

Our future growth and success in our existing business lines will depend to a significant degree on the rate at which broadcasters and cable operators convert to digital video systems and the rate at which digital video technology expands to additional market segments. Television broadcasters and cable television operators have historically relied on and utilized traditional analog technology. Digital video technology is still a relatively new technology and the move from traditional analog technology to digital video technology requires a significant initial expense for television broadcasters and cable television operators. Accordingly, the use of digital video technology may not expand among television broadcasters and cable television operators or into additional markets. If television broadcasters and cable television operators do not accept and implement digital video technology, or if the October 1996 ruling of the FCC mandating these changes is repealed or amended, we may not be able to grow our existing business lines and our financial condition will suffer.

We will be unable to compete effectively if we fail to anticipate product opportunities based upon emerging technologies and standards and fail to develop products that incorporate these technologies and standards.

We may spend significant time and money on research and development to design and develop products around an emerging technology or industry standard. If an emerging technology or industry standard that we have identified fails to achieve broad market acceptance in our target markets, we may be unable to generate significant revenue from our research and

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development efforts. Moreover, even if we are able to develop products using adopted standards, our products may not be accepted in our target markets. As a result, our business would be materially harmed.

We have limited experience in designing and developing products that support industry standards. If systems manufacturers move away from the use of industry standards that we support with our products and adopt alternative standards, we may be unable to design and develop new products that conform to these new standards. The expertise required is unique to each industry standard, and we would have to either hire individuals with the required expertise or acquire this expertise through a licensing arrangement or by other means. The demand for individuals with the necessary expertise to develop a product relating to a particular industry standard is generally high, and we may not be able to hire such individuals. The cost to acquire this expertise through licensing or other means may be high and such arrangements may not be possible in a timely manner, if at all.

We may not successfully develop strategic relationships that may be important to our business.

We believe the formation of strategic relationships will be important to our interactive television business. The inability to find strategic partners or the failure of any existing relationships to achieve meaningful positive results for us could harm our business. We will rely in part on strategic relationships to help us:

Maximize adoption of our products through distribution arrangements,

Enhance our brand,

Expand the range of commercial activities based on our technology, and

Increase the performance, functionality and utility of our products and services.

Many of these goals are beyond our traditional strengths. We anticipate that the efforts of our strategic partners will become more important as the use of interactive television matures. For example, we may become more reliant on strategic partners to provide multimedia content and build the necessary infrastructure for media delivery. We may not be successful in forming strategic relationships. In addition, the efforts of our strategic partners may be unsuccessful. Furthermore, these strategic relationships may be terminated before we realize any benefit.

We operate in a highly competitive environment and industry and we may lack resources needed to capture increased market share.

We may not be able to compete successfully against our current or future competitors. The markets for graphics imaging and editing products are highly competitive. These markets are characterized by constant technological change and evolving industry standards. Many of our competitors have significantly greater financial, technical, manufacturing and marketing resources than we have. In addition, certain vendors dominate certain product categories and market segments, on a region-by-region basis, in which we currently operate or may wish to operate in the future. As a result, our ability to compete and operate in these areas may be limited.

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We anticipate increased competition from companies with which we currently compete and from companies that may enter our industry. We believe our primary competitors are Pinnacle Systems Inc., Pixel Power, vizrt Ltd. and Inscriber Technology Corporation.

We believe that our ability to compete depends on factors both within and outside our control, including the success and timing of new product developments introduced by us and our competitors, product performance and price, market presence and customer support. We may not be able to compete successfully with respect to these factors. Maintaining any advantage that we may have, now or in the future, over our competitors will require our continuing investments in research and development, sales and marketing and customer service and support. In addition, as we enter new markets, we may encounter distribution channels, technical requirements and competitive factors that differ from those in the markets in which we currently operate. We may not be able to compete successfully in these new markets. In addition, increased competition in any of our current markets could result in price reductions, reduced margins or loss of market share, any of which could harm our business, financial conditi on and results of operations.

We may encounter periods of industry-wide surface mount components shortage, resulting in pricing pressure and a risk that we could be unable to fulfill our customers' requirements.

The semiconductor industry (from which surface mount components are derived) has historically been characterized by wide fluctuations in the demand for, and supply of, its products, which feed the electronics, telecommunications and computer markets. These fluctuations have resulted in circumstances when supply and demand for the industry's products have been widely out of balance. Our operating results may be materially harmed by industry-wide surface mount component shortage, which could result in severe pricing pressure. In a market with undersupply, we would have to compete with the larger customers of our vendors for limited manufacturing capacity. In such an environment, we may be unable to have our products manufactured in a timely manner or in quantities necessary to meet our requirements. Since we outsource a large proportion of our products, we are particularly vulnerable to such supply shortages. As a result, we may be unable to fulfill orders and may lose customers. Any futur e industry-wide shortage of surface mount components or manufacturing capacity would materially harm our business.

We depend upon one supplier for the software license of our Aprisa product.

Aprisa is our range of stillstores, clipstore and digital disk recorder (DDR) system products, including the SSX, 100, 200, 250, 300 and VCS. Our Aprisa DDR software permits our Aprisa DDRs to operate as network entities and provides many of the features available in the Aprisa product line. Our Aprisa product line has represented 11%, 10% and 18% of revenues for the years ended December 31, 2003, 2002 and 2001, respectively. We purchase the software component of this product from Video Technics, a company where we have a 20% ownership interest. Video Technics is a small, privately held company whose financial success is partially dependent on the success of the Aprisa product line. There is no assurance that they will not face financial problems and not be able to meet its supply obligations.

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We depend on a limited number of suppliers of surface mount components.

We depend on a limited number of contract manufacturers to produce surface mount components for our products. Our principal suppliers may experience unanticipated events that could inhibit their ability to provide us with adequate manufacturing capacity on a timely basis, or at all. Introducing new surface mount components or transferring existing design and specifications to a new third party manufacturer would require significant development time to adapt our designs to their manufacturing processes and could cause product shipment delays. In addition, the costs associated with manufacturing our components may increase if we are required to use a new third party manufacturer. If we fail to satisfy our manufacturing requirements, our business would be materially harmed.

If we fail to adequately forecast demand for our products, we may incur product shortages or excess product.

Our agreements with third-party manufacturers require us to provide forecasts of our anticipated manufacturing orders, and place binding manufacturing orders in advance of receiving purchase orders from our customers. This may result in product shortages or excess product inventory because it may not be practical to increase or decrease our rolling forecasts under such agreements. Obtaining additional supply in the face of product shortages may be costly or not possible, especially in the short term. Our failure to adequately forecast demand for our products would materially harm our business.

Problems in manufacturing our products, especially our new products, may increase the costs of our manufacturing process.

Difficulties or delays in the manufacturing of our products can adversely impact our gross margin. In the past we have experienced production and supply problems that affected the gross margin. We may experience in the future the same type of problems or other problems. This would be especially true if we face cash constraints, slowing payments to our suppliers. That in turn affects our ability to manufacture products in a timely manner, which would adversely affect our profitability.

We may be unable to grow our business if the markets in which we sell our products do not grow.

Our success depends in large part on the continued growth of various markets that use our products. Any decline in the demand for our products in the following markets could materially harm our business:

Broadcasting infrastructure projects,

Video/audio, graphics and imaging,

Advertising,

Corporate customers, or

Military and security systems.

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Slower growth in any of the other markets in which our products are sold may also materially harm our business. Many of these markets are characterized by rapid technological change and intense competition. As a result, our products may face severe price competition, become obsolete over a short time period, or fail to gain market acceptance. In addition, customers may require replacements and upgrades of equipment rather than the purchase of new, more expensive products. Any of these occurrences would materially harm our business, financial condition and results of operations.

Our business will suffer if our systems fail or become unavailable.

A reduction in the performance, reliability and availability of our network infrastructure will harm our ability to distribute our products and services to our users, as well as our reputation and ability to attract and retain funding, users and content providers. Our systems and operations could be damaged or interrupted by fire, flood, power loss, telecommunications failure, Internet breakdown, earthquake and similar events. Our systems are also subject to viruses, break-ins, sabotage, acts of physical terrorism, intentional acts of vandalism, hacking, cyber-terrorism and similar misconduct. We do not have fully redundant systems or a formal disaster recovery plan, and we might not carry adequate business interruption insurance to compensate us for losses that may occur from a system outage. Any system error or failure that causes interruption in availability of products or content or an increase in response time could result in a loss of potential or existing customers or content prov iders and declines in stock values. If we suffer sustained or repeated interruptions, our products and services could be less attractive to our users and our business would be harmed.

In order to become profitable, we will need to offset the general pattern of declines and fluctuations in the prices of our products.

The legacy iNFiNiT!, MAX!> and MAXINE! products sold at prices that were higher than the current Duet line prices. With advances in technology and introduction of Windows^®-based operating systems, we have to strive continuously to provide more performance and characteristics in our products at lower prices. We may not be able to do so successfully in the future, thus negatively affecting our performance.

We depend upon third party dealers to market and sell our products and they may discontinue sale of our products, fail to give our products priority or be unable to successfully market, sell and support our products.

We employ independent, third-party dealers to market and sell a significant portion of our products. During 2003, 28% of our sales were made through our dealers and representatives. Although we have contracts with our dealers and representatives, any of them may terminate their relationship with us on short notice. The loss of one or more of our principal dealers, or our inability to attract new dealers, could materially harm our business. We may lose dealers in the future and we may be unable to recruit additional or replacement dealers. As a result, our future performance will depend in part on our ability to retain our existing dealers and representatives and attract new dealers and representatives that will be able to market, sell and support our products effectively.

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Furthermore, with advances in technology we have been able to introduce lower-priced products. It may be that our distribution strategy needs to be modified as new product prices are lowered. It is possible we may not be successful in modifying our distribution strategy, thus adversely impacting our ability to sell our new products.

Problems associated with international business operations could subject us to risks from financial, operational and political situations, and affect our ability to manufacture and sell our products.

Sales to customers located outside the United States accounted for 9%, 24% and 19% of our total sales in 2003, 2002 and 2001, respectively. We anticipate that sales to customers located outside the United States will continue to represent a significant portion of our total sales in future periods. Accordingly, our operations and revenues are subject to a number of risks associated with foreign commerce, including the following:

Managing foreign dealers and foreign customers, which may be state corporations or government agencies,

Staffing and managing foreign branch offices,

Political and economic instability,

Foreign currency exchange fluctuations,

Changes in tax laws, tariffs, environmental directives, freight rates and governmental royalties,

Timing and availability of export licenses,

Changes in laws and policies governing operations of foreign-based companies,

Inadequate protection of intellectual property rights in some countries, and

Obtaining governmental approvals for certain products.

In 2003 we denominated sales of our products in foreign countries exclusively in U.S. dollars, British Pounds Sterling and Euros. As a result, any increase in the value of the U.S. dollar relative to the local currency of a foreign country will increase the price of our products in that country so that our products become more expensive to customers in the local currency of that foreign country. As a result, sales of our products in that foreign country may decline. To the extent any such risks materialize, our business would be materially harmed.

We may be unable to accurately predict quarterly results which could adversely affect the trading price of our stock.

We build up our sales projections from information obtained by the sales force and our dealers. Furthermore, in certain large contracts, there are acceptance and/or commissioning conditions. It is possible our products are delivered but are not paid for because acceptance and/or commissioning have not taken place to the satisfaction of the customer. We would not be able to recognize the revenue until the customer has accepted and/or commissioned the products.

Any deviation or inaccuracy in these above factors could affect our quarterly revenue and results of operations. As a result, on a quarterly basis, our stock price could materially fluctuate.

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We may be unable to successfully grow our business if we fail to compete effectively with others to attract and retain key personnel.

We believe our future success will depend upon our ability to attract and retain engineers and other highly skilled personnel and sales people. Most of our employees are at-will and only a few are subject to employment contracts. Hiring qualified sales and technical personnel will be difficult due to the limited number of qualified professionals. Competition for these types of employees is high. We have in the past experienced difficulty in recruiting and retaining qualified sales and technical personnel necessary for the development of our business. Failure to attract and retain personnel, particularly sales and technical personnel, would materially harm our business. We are also highly dependent upon the efforts of our senior management. The loss of the services of one or more of these individuals may delay or prevent us from achieving our objectives.

We may not be able to protect our proprietary technology and may be sued for infringing on the rights of others.

Protection of intellectual property rights is crucial to our business, since that is how we keep others from copying innovations that are central to our existing and future products. Our success also depends, in part, upon our ability to operate without infringing the rights of others. We rely on a combination of methods to protect our proprietary intellectual property, technology and know-how, such as:

trade secret laws,

trademark law,

patent law,

contractual provisions,

confidentiality agreements, and

certain technology and security measures.

Because it is critical to our success that we are able to prevent competitors from copying our innovations, we intend to continue to seek patent and trade secret protection for our products. The process of seeking patent protection can be long and expensive and we cannot be certain that any currently pending or future applications will actually result in issued patents, or that, even if patents are issued, they will be of sufficient scope or strength to provide meaningful protection or any commercial advantage to us.

The steps we have taken regarding our proprietary technology, however, may not be sufficient to deter misappropriation. For example, we have rights in trademarks, service marks and copyrights that are not registered. In addition, the laws of certain countries in which our products are or may be developed, manufactured, sold or otherwise distributed do not protect our products and intellectual rights to the extent of the laws of the U.S. We also rely on trade secret protection for our technology, in part through confidentiality agreements with our employees, consultants and third parties. However, employees may breach these agreements, and we may

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not have adequate remedies for any breach. In any case, others may come to know about or determine our trade secrets through a variety of methods.

In the systems and software industries, companies receive notices from time to time alleging infringement of patents, copyrights or other intellectual property rights of others. In the past we have been, and may from time to time continue to be, notified of claims that we may be infringing patents, copyrights or other intellectual property rights owned by third parties. Companies may pursue claims against us with respect to the alleged infringement of patents, copyrights or other intellectual property rights owned by third parties. In addition, litigation may be necessary to protect our intellectual property rights and trade secrets, to determine the validity of and scope of the proprietary rights of others or to defend against third party claims of invalidity. Any litigation could result in substantial costs and diversion of resources.

Existing copyright, trademark, patent and trade secret laws afford only limited protection. Moreover, effective protection of copyrights, trade secrets, trademarks and other proprietary rights may be unavailable or limited in certain foreign countries and territories. Domestic and foreign laws, in combination with the steps we have taken to protect our proprietary rights may not be adequate to prevent misappropriation of our technology or other proprietary rights. Also, these protections do not preclude competitors from independently developing products with functionality or features similar or superior to our products and technologies or designing around the patents we own or the technology we create.

Litigation may be necessary to defend against claims of infringement, to enforce our proprietary rights, or to protect trade secrets and that could result in substantial cost, and a diversion of resources away from the day-to-day operation of our business.

We may not be able to successfully implement our contingency plan upon a decline in revenues.

During 2001 we effected a restructuring that involved reductions in staff and overhead, as well as reduced capital expenditures and discretionary spending, so as to reduce costs and expenses and reduce cash outflows in response to lower revenues. If sales decline we could be forced to further reduce staff and other costs and expenses. Were this to occur, we may be unable to reduce personnel and other costs and expenses on a timely basis, which could have a material adverse effect on our business, financial condition and results of operations. In addition, further reductions in personnel and costs and expenses may adversely affect our ability to generate revenues.

We are uncertain of our ability to obtain additional financing or refinance existing obligations for our future needs, and liquidity issues have and may continue to increase our cost of capital.

At December 31, 2003, we had cash and cash equivalents of $7.0 million and working capital of $7.9 million. We also had repayment obligations on Series A and Series B Debentures of $8.7 million at December 31, 2003.

The net proceeds of the sale of our Pro-Bel Division was used to pay down a portion of our indebtedness, with the balance retained for working capital purposes. As of November 13,

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2003, we repaid in full all outstanding indebtedness with our U.S. bank and terminated our borrowing arrangement. On December 31, 2003, we used $2.5 million to pay off our Senior Subordinated Notes that matured on such date. On December 31, 2003, we closed on an exchange offer with holders of Series A and B Debentures whereby approximately 18.3% of debentures totaling $1.95 million were exchanged for discounted cash payments of $1.04 million and 853,816 shares of common stock. This resulted in a gain of $0.6 million, in accordance with SFAS No. 15, which was recorded in the fourth quarter of 2003. Consequently, at December 31, 2003, the Company's outstanding indebtedness, consisting solely of Series A and B Debentures, totaled $8.7 million.

On February 27, 2004, the Company closed on a second exchange offer with a majority of the remaining Series A and B Debenture holders whereby $8.8 million of debentures were exchanged for $3.8 million in cash and new Series C and D Debentures totaling $4.6 million were issued. At February 27, 2004 the total amount of outstanding debentures total $4.7 million.

In March 2004, the Company received a commitment from a new U.S. bank for a $2.5 million working capital line of credit which extends through April 15, 2005. The Company will have the ability to borrow on a revolving credit basis based on levels of eligible accounts receivable. We believe that cash on hand, net cash expected to be generated in the business, and availability under our new line of credit, will be sufficient to meet our needs for the next twelve months if we are able to achieve our planned results of operations. However, we may need to raise additional funds in order to fund our business, expand our sales and marketing activities, develop or enhance new products, respond to competitive pressures and satisfy our existing and any new obligations that may arise. Additional financing may not be available on terms favorable to us, or at all. While we significantly reduced our cash usage for operations during recent years, capital is critical to our business, and our ability to ra ise capital in the event that ongoing losses use our available cash would have a material adverse effect on our business.

The TV broadcast industry has historically expected substantial marketing expenses.

In the past we have spent generously on marketing. We have attended major trade shows in the U.S. and Europe, which cost us a substantial amount of money. Our plan going forward is to participate in the principal trade shows and some of the minor shows. We plan to control these expenditures and be more frugal. We cannot provide any assurance we will remain frugal and judicious in expensing our marketing dollars, because of market demands. Furthermore, we cannot provide any assurance that selective spending of our marketing dollars will pay off in the areas in which we are expecting results.

We sell hardware and software service agreements to our customers that may become onerous because of product problems or the age of our products.

We generated approximately 8% of our 2003 revenues from hardware and software service agreements sold to our customers. The customary term of such agreements is one year. In order to maintain our customer relations, we may need to support customers' products beyond their useful life, which may require us to expend significant resources. It is possible that our products, current and prospective, will not provide sufficient customer satisfaction and require

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inordinate and expensive service support for each product category, beyond the level planned in the service agreements in place. That, by itself, would increase our expenses and make these service agreements unprofitable. In addition, customers who purchase service agreements and experience problems may be disinclined to renew their service agreements in subsequent years, hence affecting the revenues generated from service agreements.

Our warranties on products may prove insufficient and could cause us unexpected costs.

We generally provide warranties on all of our products for one year. It is possible that our products, current and prospective, do not provide sufficient customer satisfaction and we may decide to extend our warranty for a particular product or product line. In addition, we may extend the warranty period in certain special situations to win a particular contract, hence extending our liability period.

Any unplanned increase of our warranty periods would increase our costs and reduce our profitability. Because of the attendant contingent liabilities, it is possible that a reserve would have to be established, further affecting our operating results.

If a new law or regulation is created pertaining to the telecommunications and television industries it could cause our customers to suffer and impede our ability to increase profits.

The enactment by U.S. federal or state or international governments of new laws or regulations, changes in the interpretation of existing regulations or a reversal of the trend toward deregulation in these industries could cause our customers to suffer, and thereby adversely affect our ability to continue to be profitable. Television operators are subject to extensive government regulation by the FCC and other U.S. federal and state regulatory agencies. These regulations could limit capital expenditures by television operators and if that happens, our business, financial condition and results of operations may suffer.

The telecommunications and television industries are subject to extensive regulation in the United States and other countries. Our business is dependent upon the continued growth of these industries in the United States and internationally. Recent legislation has lowered the legal barriers to entry for companies into the United States' multi-channel television market, but telecommunications companies may not successfully enter this or related markets. Moreover, the growth of our business internationally is dependent in part on similar deregulation of the telecommunications industry abroad, which deregulation may not occur.

Our principal stockholders have significant voting power and may vote for actions that may not be in the best interests of our stockholders.

Our officers, directors and principal stockholders together control approximately 41% (as of March 1, 2004) of our issued and outstanding common stock. As a result, these stockholders, if they act together, will be able to significantly influence the management and affairs of our company and all matters requiring stockholder approval, including the election of directors and approval of significant corporate transactions. This concentration of ownership may have the effect of delaying or preventing a change in control or other business combination and might

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affect the market price of our common stock. This concentration of ownership may not be in the best interest of our other stockholders.

We have not issued dividends on our common stock for over thirteen years and do not anticipate doing so in foreseeable future.

We have not paid cash dividends on our common stock since November 27, 1989 and do not anticipate paying any cash dividends in the foreseeable future. We intend to retain any earnings for use in our business. The decision to pay dividends in the future will be at the discretion of our board of directors. The historical and prospective lack of issuing dividends may diminish the value of the common stock.

The price of our common stock may be volatile.

The trading price of our common stock has been and may continue to be subject to fluctuations in response to quarter-to-quarter variations in operating results, changes in earnings estimates by analysts, general conditions in the digital media industry, announcements of technological innovations or new products introduced by us or our competitors and other events or factors. The stock market in general, and the shares of technology companies in particular, have experienced extreme price fluctuations in recent years. During the period commencing January 1, 2002 through March 1, 2004, the closing price of our common stock has ranged between $0.15 and $0.72. This volatility has had a substantial impact on the market prices of securities issued by many companies for reasons unrelated to the operating performance of the companies affected. These broad market fluctuations may adversely affect the market price of our common stock. In addition, our common stock is now traded on the OTC Bulle tin Board. You may expect trading volume to be low in such a market. Consequently, the activity of only a few shares may affect the market and may result in wide swings in price and in volume.

An increase in the number of shares of our common stock outstanding could reduce the price of our common stock.

At December 31, 2003, there were 9,520,000 potentially dilutive shares that would be issuable if all debentures, including interest paid in kind, were converted and all outstanding warrants and common stock options were exercised. As of February 27, 2004, subsequent to the Company's debt exchange offer that closed on that date, there were 9,413,000 potentially dilutive shares that would be issuable. While debt decreased, the conversion price on the new debt is lower than on the old debt, resulting in approximately the same number of shares. Issuance or sale of a substantial number of shares of additional common stock, or the perception that such issuance or sales could occur, could adversely affect the market price for our common stock as it would result in additional shares of our common stock being available on the public market. These issuances or sales also might make it difficult for us to sell equity securities in the future at a time and at a price that we deem appropriate.

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We have various mechanisms in place to discourage takeover attempts, which may reduce or eliminate your ability to sell your shares for a premium in a change of control transaction.

Various provisions of our Amended and Restated Certificate of Incorporation and Amended and Restated By-Laws and in New York corporate law may discourage, delay or prevent a change in control or takeover attempt of our company by a third party which is opposed to by our management and board of directors. Public stockholders who might desire to participate in such a transaction may not have the opportunity to do so. These anti-takeover provisions could substantially impede the ability of public stockholders to benefit from a change of control or change in our management and board of directors. These provisions include:

authorizing the issuance of "blank check" preferred stock that could be issued by our board of directors to increase the number of outstanding shares and thwart a takeover attempt,

limiting who may call special meetings of our stockholders, and

establishing advance notice requirements for nominations of candidates for election to our board of directors or for proposing matters that can be acted upon by our stockholders at stockholder meetings.

It may be difficult to sell your shares and the value of your investment may be reduced because our common stock has experienced low trading volumes on the OTC Bulletin Board and currently lacks public market research analyst coverage.

Our common stock trades on the OTC Bulletin Board and it experiences lower trading volumes than many stocks listed on a national exchange, and therefore it may be difficult for an investor to sell the shares and to realize any return on an investment in our common stock. Because our common stock lacks public market research analyst coverage it is more difficult to obtain reliable information about its value or the extent of risks to which the investment is exposed. Even if a liquid market for the shares of our common stock exists in the future, there can be no assurance that the securities could be transferred at or above the price paid. The price of our common stock may fall against the investor's interests, and the investor may get back less than he or she invested.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Index to Financial Statements

Financial Statements:	Page

Report of Independent Auditors - PricewaterhouseCoopers LLP	41

Consolidated Balance Sheets at December 31, 2003 and 2002	42

Consolidated Statements of Operations for the Years Ended December 31, 2003,
2002 and 2001	43

Consolidated Statements of Cash Flows for the Years Ended December 31, 2003,
2002 and 2001	44

Consolidated Statements of Shareholders' (Deficit) Equity for the Years
Ended December 31, 2003, 2002 and 2001	45

Notes to the Consolidated Financial Statements	46

Financial Statement Schedule:

II - Valuation and Qualifying Accounts	75

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REPORT OF INDEPENDENT AUDITORS

To the Board of Directors and Shareholders of Chyron Corporation:

In our opinion, the consolidated financial statements and the financial statement schedule listed under Item 8 present fairly, in all material respects, the financial position of Chyron Corporation and its subsidiaries at December 31, 2003 and 2002 and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2003 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the consolidated financial statement schedule listed in the accompanying index presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. These financial statements and the financial statement schedule are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with aud iting standards generally accepted in the United States of America which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

/s/PricewaterhouseCoopers LLP

PricewaterhouseCoopers LLP

Melville, New York

March 4, 2004

-41-

CHYRON CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)

	December 31,
Assets	2003	2002
Current assets:
Cash and cash equivalents	$6,968	$1,217
Restricted cash		1,000
Accounts receivable, net	3,454	6,827
Inventories, net	1,714	8,668
Marketable securities	288	76
Prepaid expenses and other current assets	667	636
Total current assets	13,091	18,424

Property and equipment, net	630	4,420
Intangible assets, net		253
Pension asset		3,888
Other assets	454	1,002
TOTAL ASSETS	$14,175	$27,987

Liabilities and Shareholders' Deficit
Current liabilities:
Accounts payable and accrued expenses	$3,674	$7,251
Current portion of long-term debt and convertible debentures		7,627
Deferred revenue	806	915
Pension liability	643	98
Capital lease obligations	11	92
Total current liabilities	5,134	15,983

Long-term debt		1,086
Convertible debentures	8,677	9,572
Pension liability	1,712	2,124
Other liabilities	233	1,585
Total liabilities	15,756	30,350

Commitments and contingencies

Shareholders' deficit:
Preferred stock, par value without designation
Authorized - 1,000,000 shares, Issued - none
Common stock, par value $.01
Authorized - 150,000,000 shares
Issued and outstanding - 40,687,466 and 39,563,691 at December 31,
2003 and 2002, respectively	407	396
Additional paid-in capital	71,795	71,453
Accumulated deficit	(74,006)	(73,613)
Accumulated other comprehensive income (loss)	223	(599)
Total shareholders' deficit	(1,581)	(2,363)
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT	$14,175	$27,987

See Notes to Consolidated Financial Statements

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CHYRON CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)

	Year Ended December 31,
	2003	2002	2001

Net sales	$19,369	$21,063	$19,076
Cost of products sold	8,367	10,523	15,981
Gross profit	11,002	10,540	3,095

Operating expenses:
Selling, general and administrative	8,102	8,475	14,949
Research and development	2,663	2,190	2,754
Goodwill impairment, restructuring and unusual charges			8,570

Total operating expenses	10,765	10,665	26,273

Operating income (loss)	237	(125)	(23,178)

Interest expense	2,052	2,014	1,261
Interest income	(21)	(14)	(226)
Other expense (income), net	150	(42)	211

Loss from continuing operations	(1,944)	(2,083)	(24,424)

Discontinued operations:
Loss from discontinued operations	(1,048)	(961)	(9,243)
Gain on sale from disposition of discontinued operations	2,599

Net loss	$ (393)	$(3,044)	$(33,667)

Net income (loss) per share - basic and diluted
Continuing operations	$ (0.05)	$(0.05)	$(0.62)
Discontinued operations	0.04	(0.03)	(0.24)
Net loss per share - basic and diluted	$(0.01)	$(0.08)	$(0.86)

Weighted average shares used in computing net
loss per share:
Basic	39,688	39,564	39,352
Diluted	39,815	39,564	39,352

See Notes to Consolidated Financial Statements

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CHYRON CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

	Year Ended December 31,
	2003	2002	2001
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$(393)	$(3,044)	$(33,667)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Goodwill impairment, restructuring and unusual charges			6,115
(Income) loss from discontinued operations, net	(1,551)	961	9,243
Depreciation and amortization	588	1,149	2,648
Loss on sale of investments and asset writedown	560		328
Non-cash settlement of interest liability	1,190	1,322	563
Gain on debt extinguishment	(579)
Other	610	438	184
Changes in operating assets and liabilities, net of acquired
assets & liabilities in 2001:
Accounts receivable	553	(1,009)	5,740
Inventories	942	1,170	3,529
Prepaid expenses and other assets	(801)	15	122
Accounts payable and accrued expenses	(402)	(491)	(1,158)
Other liabilities	177	(230)	150
Net cash provided by (used in) operating activities	894	281	(6,203)

CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of subsidiary, net	10,294
Proceeds from sale of property/investments	83		113
Acquisition of Interocity			(5,000)
Acquisition of property and equipment	(155)	(62)	47
Decrease (increase) in restricted cash	1,000		(1,000)
Net cash provided by (used in) investing activities	11,222	(62)	(5,840)

CASH FLOWS FROM FINANCING ACTIVITIES:
(Payments) borrowings on term loan	(1,350)	(750)	1,261
Payments from revolving credit agreements, net	(2,311)	(400)	(2,540)
(Payments) proceeds from issuance of convertible debentures	(3,682)		2,210
Payments of capital lease obligations	(16)	(54)	(76)
Net cash (used in) provided by financing activities	(7,359)	(1,204)	855

Net cash provided by (used in) discontinued operations	994	(1,140)	(802)

Change in cash and cash equivalents	5,751	(2,125)	(11,990)
Cash and cash equivalents at beginning of year	1,217	3,342	15,332
Cash and cash equivalents at end of year	$ 6,968	$ 1,217	$ 3,342

SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid	$ 469	$ 280	$ 596

See Notes to Consolidated Financial Statements

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CHYRON CORPORATION
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' (DEFICIT) EQUITY

(In thousands)

					Accumulated
			Additional		Other
			Paid-In	Accumulated	Comprehensive
	Shares	Amount	Capital	Deficit	Income(loss)	Total

Balance at January 1, 2001	38,870	$ 389	$70,022	$(36,902)	$(548)	$32,961

Net loss				(33,667)		(33,667)

Cumulative translation adjustment					(166)	(166)

Unrealized loss on available for sale securities					(124)	(124)

Total comprehensive loss						(33,957)

Exercise of stock options	2		1			1

Shares issued in connection with the acquisition of	633	6	1,235			1,241
Interocity

Issuance of common stock as compensation	59	1	66	0	0	67

Balance at December 31, 2001	39,564	396	71,324	(70,569)	(838)	313

Net loss				(3,044)		(3,044)

Cumulative translation adjustment					202	202

Unrealized gain on available for sale securities					37	37

Total comprehensive loss						(2,805)

Warrants issued			129			129

Balance at December 31, 2002	39,564	396	71,453	(73,613)	(599)	(2,363)

Net loss				(393)		(393)

Cumulative translation adjustment					378	378

Unrealized gain on available for sale securities					444	444

Total comprehensive income						429

Shares issued in connection with debt
redemption and extinguishment	901	9	272			281

Shares issued to 401K plan	223	2	70			72

Balance at December 31, 2003	40,688	$ 407	$71,795	$(74,006)	$ 223	$(1,581)

See Notes to Consolidated Financial Statements

-45-

CHYRON CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Business

Chyron Corporation and its wholly-owned subsidiaries ("Chyron" or the "Company") is a supplier of character generators ("CG") and graphics hardware and software related products to the television industry. The Company develops, manufactures, markets and supports hardware and software products that enhance the presentation of live and pre-recorded video, audio and other data. Chyron's products are used in broadcast production facilities worldwide for applications including news, sports, weather and election coverage. The Company's graphics products create, manipulate, store, playback and manage content including 2D/3D text, logos, graphics, animations and video stills/clips.

On November 6, 2003, the Company completed the sale of the entire issued share capital of its wholly owned subsidiary, Chyron UK Holdings Limited (Chyron UK Holdings), including its operating subsidiary, Pro-Bel Limited, to Oval (1883) Limited, pursuant to the terms of a sale and purchase agreement. In effect, this eliminated the entire operations of the Signal Distribution and Automation segment and only the Graphics Division remains. As a result, the Company now focuses completely on its core-competency, the development of real-time graphics solutions for its worldwide professional video and TV broadcast customers. The gross proceeds were approximately $15.3 million, before the required settlement of Pro-Bel bank obligations of approximately $3.4 million and related transaction costs of approximately $1.4 million. The Company realized a gain on sale of $2.6 million that was recorded in the fourth quarter of 2003.

The net proceeds of the sale of $10.5 million was used to pay down a portion of our indebtedness, with the balance retained for working capital purposes. As of November 13, 2003, we repaid in full the remaining balance of outstanding indebtedness with our U.S. bank and terminated our borrowing arrangement. On December 31, 2003, we used $2.5 million to pay off our Senior Subordinated Notes that matured on such date. On December 31, 2003, we closed on an exchange offer with holders of Series A and B Subordinated Convertible Debentures whereby approximately 18.3% of debentures totaling $1.95 million were exchanged for discounted cash payments of $1.04 million and 853,816 shares of common stock. This resulted in a gain of $0.6 million, in accordance with SFAS No. 15, "Accounting by Debtors and Creditors for Troubled Debt Restructuring" ("SFAS No. 15"), which was recorded in the fourth quarter of 2003. Consequently, at December 31, 2003, the Company's outstanding indebte dness, consisting solely of Series A and B Subordinated Convertible Debentures, totaled $8.7 million.

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We provide graphics products to the broadcast industry for use in digital television. Our future growth and success will depend to a significant degree on the continued growth of various markets that use our products. During 2001, we effected a restructuring that involved reductions in staff and overhead, as well as reduced capital expenditures and discretionary spending, so as to reduce costs and expenses and reduce cash outflows in response to lower revenues. We do not currently intend to effect another restructuring as we did in 2001 unless a downturn in sales necessitates it. We operate in a rapidly changing environment and must remain responsive to changes as they occur. In the event that revenues are significantly below 2004 forecasted revenues we believe we have the ability to reduce or delay discretionary expenditures, including capital purchases, and further reduce headcount, according to our contingency plan so that we will have sufficient cash resources through December 31, 2004. However, there can be no assurance that we will be able to adjust our costs in sufficient time to respond to revenue shortfalls, should that occur.

We believe that cash on hand and net cash to be generated in the business, and availability under our new line of credit, will be sufficient to meet our cash needs for the next twelve months if we are able to achieve our planned results of operations. However, there can be no assurance we will be able to achieve our plan.

Basis of Presentation

The consolidated financial statements include the accounts of the Company and our wholly-owned subsidiaries. All significant intercompany amounts have been eliminated. Investments in affiliates of less than 20 percent are generally stated at cost. Investments in companies representing ownership interests of 20 percent to 50 percent are accounted for by the equity method of accounting. Under the equity method, we include our pro-rata share of income (loss) of such equity investment, in our consolidated income (loss).

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues, costs and expenses during the periods presented. Estimates made by management include inventory valuations, allowances for doubtful accounts, warranty reserves, forecasts of 2004 results and cash requirements. Actual results could differ from those estimates.

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Cash and Cash Equivalents

Cash includes cash on deposit and amounts invested in highly liquid money market funds. Cash equivalents consist of short term investments with original maturities of three months or less. The carrying amount of cash and cash equivalents approximates their fair value.

Inventories

Inventories are stated at the lower of cost or market, cost being determined primarily on the basis of average cost. The need for inventory obsolescence provisions is evaluated by us and, when appropriate, reserves for technological obsolescence, non-profitability of product lines and excess quantities are established.

Property, Equipment and Depreciation

Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation and amortization are provided on the straight line method over the following estimated useful lives:

Machinery and equipment

3-10 years

Furniture and fixtures

5-10 years

Leasehold improvements

Shorter of the life of improvement or

remaining life of the lease

Excess of Cost over Net Tangible Assets Acquired

We continually evaluate whether changes have occurred that would require revision of the remaining estimated useful life of the assigned excess of cost over the value of net tangible assets acquired (goodwill) or its carrying amount. Our method used to measure whether or not there is an impairment in the recorded value of an investment is to use the undiscounted cash flow method prescribed by FAS 142. Under this method we compare the undiscounted future cash flows with the recorded value of the investment to determine whether an impairment exists. If an impairment exists, we use the discounted cash flow method to calculate the impairment amount.

Marketable Securities

We account for our investments in accordance with the provisions of SFAS No. 115, "Accounting for Certain Investments in Debt and Equity Securities." This standard requires that certain debt and equity securities be adjusted to market value at the end of each accounting period. Management determines the appropriate classification of marketable securities at the time of purchase and reevaluates such designation as of each balance sheet date. At December 31, 2003, all securities covered by SFAS No. 115 were designated as available for sale. Accordingly, these securities are stated at fair value, with unrealized gains and losses reported as a separate component of comprehensive income or loss, net of tax. Realized gains and losses on sales of

-48-

investments, as determined by the specific identification method, are included in the Consolidated Statements of Operations.

Research, Development and Engineering

Technological feasibility for our products is reached shortly before the products are released to manufacturing. Consequently, costs incurred after technological feasibility is established are not material, and accordingly, we expense all research and development costs when incurred. Research and development costs include wages and other personnel costs, material costs and an allocation of certain indirect costs related to facilities.

For periods prior to 2000 certain software development costs were capitalized, which resulted in amortization expense of such costs of approximately $0.4 million in 2002 and 2001. At December 31, 2002 all costs that were previously capitalized have been fully amortized.

Impairment of Long-Lived Assets

We continually evaluate whether changes have occurred that would require revisions to the carrying amounts of our long-lived assets. In making such determination, we reassess market value, assess recoverability and replacement values and evaluate undiscounted cash flows of the underlying business or assets. Currently, management does not believe any of its long-lived assets are impaired.

Revenue Recognition

Net sales includes revenue derived from sales of products and services. We recognize revenue when it is realized or realizable and earned, when we have persuasive evidence of an arrangement, the product has been shipped or the services have been provided to the customer, the sales price is fixed or determinable and collectibility is reasonably assured. Revenue is reduced for estimated customer returns and other allowances.

Revenue from time and material service contracts is recognized as the services are provided. Revenue from maintenance contracts is recognized ratably over the contractual period.

-49-

Vendor-specified objective evidence of fair value of the undelivered elements.

The functionality of the delivered elements is not dependent on the undelivered elements.

Delivery of the delivered element represents the culmination of the earnings process.

Shipping and Handling Fees and Costs

All amounts billed to a customer in a sales transaction related to shipping and handling represent revenues earned and are reported as revenue, and the costs incurred by the Company for shipping and handling are reported as an expense.

Advertising Costs

Advertising costs are expensed as incurred. Advertising expense was $0.05 million in 2003, $0.09 million in 2002 and $0.12 million in 2001.

Income Taxes

We account for income taxes in accordance with the provisions of Statement of Financial Accounting Standards No. 109 ("SFAS 109"), "Accounting for Income Taxes." Under SFAS 109, deferred income taxes are recorded to reflect the tax consequences on future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each year-end.

We account for income taxes using the liability method. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax basis of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse. Valuation allowances are provided if, based upon the weight of available evidence, it is more likely than not that some or all of the net deferred tax assets will not be realized.

Foreign Currencies

Assets and liabilities of our foreign subsidiaries are translated into U.S. dollars at the current rate of exchange, while revenues and expenses are translated at the average exchange rate during the year. Adjustments from translating foreign subsidiaries' financial statements are reported as a component of other comprehensive loss. Transaction gains or losses are included in other income and expense, net. The net impact of foreign exchange transactions for the years ended December 31, 2003, 2002 and 2001 were gains of $0.04 million, $0.05 million and $0.09 million, respectively.

-50-

Net Loss Per Share

We report our net loss per share in accordance with Financial Accounting Standards Board Statement No. 128, "Earnings Per Share." Basic net loss per common share is computed based on the weighted average number of common shares outstanding during the year. Diluted net loss per common share is computed based on the weighted average number of common shares outstanding during the year plus, when dilutive, additional shares issuable upon the assumed exercise of outstanding common stock equivalents. For 2003, 2002 and 2001 common stock equivalents of 9,520,000, 18,794,000 and 16,401,000, respectively, were not included in the computation of diluted net loss per common share because their effect would have been anti-dilutive.

Stock-Based Compensation Plans

We account for our stock compensation plans in accordance with the provisions of Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB 25"), and its related interpretations, which requires that compensation cost be recognized on the date of grant for stock options issued based on the difference, if any, between the fair market value of our stock and the exercise price. Under this intrinsic value method prescribed under APB 25 there was no compensation expense recognized for the years ended December 31, 2003, 2002 and 2001. We have adopted the disclosure requirements of SFAS 123, "Accounting for Stock-Based Compensation," which allows entities to continue to apply the provisions of APB 25 for transactions with employees and provides pro-forma earnings disclosures for employee stock grants as if the fair value based method of accounting in SFAS No. 123 had been applied to these stock grants. The following table illustrate s the effect on net loss and net loss per share if the fair value method had been applied (in thousands except per share amounts):

	Year Ended December 31,
	2003	2002	2001
Net loss, as reported	$(393)	$(3,044)	$(33,667)
Deduct: Total stock-based employee
compensation expense determined under
fair value based method, net of related
tax effects	(50)	(628)	(872)
Proforma net loss	$(443)	$(3,672)	$(34,539)
Net loss per share - basic and diluted:
As reported	$(0.01)	$(0.08)	$(0.86)
Proforma	$(0.01)	$(0.09)	$(0.88)

We account for equity instruments issued to non-employees in accordance with the provisions of SFAS No. 123 and EITF No. 96-18, "Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling Goods or Services."

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Recent Accounting Pronouncements

-52-

Reclassifications

Certain reclassification of prior years' data have been made to conform to 2003 classifications.

2. DISCONTINUED OPERATIONS

On November 6, 2003, Chyron Corporation completed the sale of the entire issued share capital of its wholly owned subsidiary, Chyron UK Holdings Limited (Chyron UK Holdings), including its operating subsidiary, Pro-Bel Limited, to Oval (1883) Limited, pursuant to the terms of a sale and purchase agreement. In effect, this eliminated the entire operations of the Signal Distribution and Automation segment and only the Graphics Division remains. As a result, the Company now focuses completely on its core-competency, the development of real-time graphics solutions for its worldwide professional video and TV broadcast customers. The gross proceeds were approximately $15.3 million, before the required settlement of Pro-Bel bank obligations of approximately $3.4 million and related transaction costs of approximately $1.4 million. This resulted in net proceeds of $10.5 million, of which $0.3 million will be paid in April 2005 (included in other assets at December 31, 2003), $0.4 million will be held in escrow, until the first quarter of 2004, pending the final valuation of net assets sold (included in other current assets at December 31, 2003), and the balance of $9.8 million was paid in cash at closing. The Company realized a gain on sale of $2.6 million that was recorded in the fourth quarter of 2003.

Consequently, this segment has been eliminated and the operating results are reported as discontinued operations. Prior year Statements of Operations and Cash Flows have been restated to reflect this segment as a discontinued operation. At December 31, 2002, the related assets and liabilities of this segment consisted of (in thousands):

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Cash	$ 642
Accounts receivable, net	2,821
Inventories, net	6,012
Prepaid expenses and other assets	419
Property and equipment, net	3,359
Pension asset	4,429
Total assets	$17,682

Accounts payable and accrued expenses	$ 3,251
Current and long term debt	2,566
Capital lease obligations	184
Other liabilities	1,055
Total liabilities	$ 7,056

Following are the Statements of Operations for the discontinued operations through November 6, 2003 (in thousands):

	2003	2002	2001

Net sales	$17,389	$20,316	$27,106
Cost of sales	8,006	9,454	15,190
	9,383	10,862	11,916
Operating expenses:
Selling, general and administrative	8,608	10,567	14,003
Research and development	1,771	1,905	2,881
Goodwill, impairment, restructuring
and unusual charges			3,898
Total operating expenses	10,379	12,472	20,782
Operating loss	(996)	(1,610)	(8,866)
Interest expense	161	206	234
Other (income) expense	(109)	(855)	143
Loss from discontinued operations	$(1,048)	$ (961)	$(9,243)

3. BUSINESS ACQUISITION

In January 2001, we acquired Interocity Development Corporation ("Interocity"), a small, privately held company. The purchase price consisted of $5 million in cash and approximately 633,000 shares of our company's common stock ($1.3 million) accounted for based on the stock price two days before and two days after the announcement, and direct acquisition costs of approximately $0.2 million. The acquisition was accounted for as a purchase in accordance with APB16 and accordingly, the $6.2 million excess of the purchase price over the value of the net assets acquired was recorded as goodwill to be amortized over a period of three years.

Interocity was a relative start up web site development company (commenced operations in 1999) providing streaming media design and development services, a market that we thought offered growth opportunities as we expected businesses to start to move towards Internet-based broadcasting and would require related consulting services in their effort. We acquired Interocity to be the cornerstone of our then new Streaming Services division that we had started in late

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2000 to build an internal infrastructure to enter this market. However, due to a sharp slowdown in the economy and a sudden and marked decline in the Internet business market in particular at the end of 2000 and into early 2001, the Streaming Services division (which included the Interocity operations) experienced lower than expected revenues in the first quarter (only $0.18 million) and early second quarter (only $0.04 million) of 2001, and the demand that we had anticipated for such services did not materialize. It became apparent in the second quarter of 2001 that revenues would not be even remotely sufficient to support the accelerating costs of entering the streaming services market and that the Streaming Services division would be a significant net user of cash that we needed for our core business, for the foreseeable future. Consequently, we quickly decided to close down the Streaming Services division and assessed the recoverability of our investment in Interocity. Our assessment concluded that the recoverability was minimal based on a comparison of undiscounted cash flow from forecasted revenues and potential disposition to the net carrying amount of our investment in Interocity in accordance with Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of" ("FAS 121"). Consequently we determined that the goodwill associated with the acquisition of Interocity was permanently impaired and should be written off. The actual impairment amount to be written off was calculated using a discounted cash flow method. Accordingly, we determined that the entire remaining unamortized net asset of $5.5 million was non-recoverable, and recognized a goodwill impairment charge of $5.5 million during the second quarter of 2001.

4. GOODWILL IMPAIRMENT, RESTRUCTURING AND OTHER

UNUSUAL CHARGES

We recorded goodwill impairment, restructuring and other unusual charges totaling $12.5 million during the second, third and fourth quarters of 2001 as summarized in the table below (in thousands):

Q2

Q3

Q4

Total

Goodwill impairment

$5,478

$3,595

$   0

$ 9,073

Fixed assets

1,504

0

0

1,504

Severance

749

0

571

1,320

Lease commitments

523

0

0

523

Other

     48

       0

    0

       48

$8,302

$3,595

$571

$12,468

Breakdown:

  Non cash charges

$6,982

$3,595

$    0

$10,577

  Cash charges

1,320

0

571

1,891

Remaining cash outlays

  at December 31, 2003

0

0

0

0

The $8.3 million charge incurred in the second quarter of 2001 was directly related to a restructuring involving the closing down of our Streaming Services division. Of this charge, $5.5 million related to the impairment of goodwill from our investment in Interocity, which was the core component of our Streaming Services division. The $3.6 million charge incurred in the third quarter of 2001 was directly related to an impairment of goodwill from our investment in our Pro-Bel division. The $0.6 million charge incurred in the fourth quarter of 2001 was related to a

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company-wide restructuring plan effected to bring costs and expenses in line with forecasted revenues. Of the total 2001 charges of $12.5 million, $10.6 million were non-cash charges, consisting of the goodwill impairment and fixed assets write-offs, and the balance of $1.9 million were cash charges, consisting of severance payments, lease payments and other minor payments. The majority of the cash charges were paid out in 2001, with the balance paid out during 2002.

The leased offices in New York, NY, London, U.K., Slough, U.K., Atlanta, GA and Cupertino, CA, were closed and the related liabilities were accrued or written-off in the second quarter of 2001, as were operating leases for software and leased communication lines, in connection with the closure of the Streaming Services division. Subsequently, the leases related to closed offices were either subleased or expired. Charges incurred in connection with theses leases were $0.5 million.

We paid severance to 40 employees, representing all of our Streaming Services division employees who were made redundant by the closure of this division. Virtually all types of positions were eliminated including managers, sales persons, consultants and support and administrative staff. Employee severance costs amounted to $0.7 million. Severance consisted of salary and benefits continuance for a period of time and was determined based on length of service or, in a few cases, as per the terms of employment agreements.

Concurrent with the closing down of our Streaming Services division, we evaluated our investment in Interocity, the core component of that Division, in accordance with FAS 121. We assessed the recoverability of our investment in Interocity by comparing the undiscounted future cash flows from forecasted results of operations and its potential disposition with the carrying amount of our investment. As a result of this analysis, we determined that the expected future cash flows would be insufficient to recover the carrying value of our investment and determined the asset was impaired. Accordingly, we determined that the entire net asset of $5.5 million was non-recoverable and recognized a goodwill impairment charge of $5.5 million during the second quarter of 2001.

In creating the Streaming Services division, we invested in computer equipment, servers and furniture. When the division was closed, those total fixed assets that could not be sold or used elsewhere in the Company, were written-off in the second quarter of 2001 in the amount of their depreciated carrying value of $1.5 million.

In the third quarter of 2001, due to continued poor results of our Pro-Bel division, we assessed the recoverability of our investment in Pro-Bel in accordance with FAS 121 by comparing the undiscounted future cash flows from forecasted results of operations with the carrying value of our investment. As a result of this analysis, we determined that the expected future cash flows would be insufficient to recover the carrying value of our investment and determined the asset was impaired. Accordingly, we recognized a goodwill impairment charge of $3.6 million during the third quarter of 2001. The amount of the goodwill impairment was calculated by comparing the carrying value of our investment with the present value of our estimated future cash flows.

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In the fourth quarter of 2001, we implemented a company-wide restructuring plan. Severance associated with the elimination/termination of 66 employees in implementing the restructuring plan was $0.57 million. Positions were eliminated in virtually all functions of the Company including marketing, manufacturing and testing, customer support, service and training, finance, support and administration and research and development. Severance consisting of salary and benefits continuance for a period of time was determined based on length of service or, in some cases, as per the terms of employment agreements. Cash outlays related to severance of $0.43 million were made during the fourth quarter of 2001 and the balance was paid out during the first and second quarters of 2002.

5. MARKETABLE SECURITIES

Our investment in equity securities of vizrt Ltd. (symbol VIZ - traded on Neuer Market and Frankfurt Stock Exchange) is categorized as available for sale and has been reflected in our balance sheet at December 31, 2003 and 2002 at fair market value of $0.3 million and $0.08 million, respectively.

Early in 2003, due to trading values that were below cost for a period of time, we determined that the decline in market value was other than temporary and wrote this security down to its fair value. Accordingly, an impairment loss of $0.2 million, which is included in other expense, was charged to earnings. A net unrealized gain of $0.2 million and an unrealized loss of $0.2 million were reported as components of other comprehensive income at December 31, 2003 and 2002, respectively. During 2003 and 2001, we recognized a realized gain of $0.06 million and a loss of $0.33 million on the sale of a portion of such securities, respectively.

6. INTANGIBLE ASSETS

In November 2000, we purchased a 20% interest in Video Technics, Inc. ("Video Technics"), which develops software for the Chyron Aprisa Clip/Stillstore systems. The purchase price consisted of $0.5 million in cash and $0.6 million in stock (300,000 shares) accounted for based on the stock price two days before and two days after the announcement. The investment is accounted for under the equity method of accounting.

The excess of the aggregate purchase price over the fair market value of net assets acquired, of approximately $1.1 million, was ascribed to an exclusive sales and marketing agreement and was amortized over three years pursuant to Statement of Financial Accounting Standards No. 142 "Goodwill and Intangible Assets." Amortization of this intangible approximated $0.25 million, $0.35 million and $0.35 million in 2003, 2002 and 2001, respectively. As of December 31, 2003 the asset is fully amortized. As of December 31, 2002 the gross asset balance was $1.1 million and the accumulated amortization was $0.8 million.

7. ACCOUNTS RECEIVABLE

Accounts receivable are stated net of an allowance for doubtful accounts of $0.98 million and $2.1 million at December 31, 2003 and 2002, respectively. Accounts receivable are principally due from customers in, and dealers serving, the broadcast video industry and non-

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broadcast display markets. At December 31, 2003 and 2002, receivables included approximately $0.5 million and $3.7 million, respectively, due from foreign customers.

Bad debt expense amounted to $0.1 million and $0.2 million in 2002 and 2001, respectively. We periodically evaluate the credit worthiness of our customers and determine whether collateral (in the form of letters of credit or liens on equipment sold) should be taken or whether reduced credit limits are necessary. Credit losses have consistently been within management's expectations. The carrying amounts of accounts receivable approximate their fair values.

8. INVENTORIES

Inventory is comprised of the following (in thousands):

	December 31,
	2003	2002
Finished goods	$ 568	$ 499
Work-in-progress	307	361
Raw material	839	1,796
	1,714	2,656
Pro-Bel Division, net		6,012
	$1,714	$8,668

9. PROPERTY AND EQUIPMENT

Property and equipment consist of the following (in thousands):

	December 31,
	2003	2002
Machinery and equipment	$11,613	$11,725
Furniture and fixtures	627	627
Leasehold improvements	498	498
	12,738	12,850
Less: Accumulated depreciation
and amortization	12,108	11,789
	630	1,061
Pro-Bel Division, net		3,359
	$ 630	$ 4,420

Depreciation expense, which includes amortization of assets under capital lease, was $0.3 million, $0.4 million and $1.4 million in 2003, 2002 and 2001, respectively.

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10. ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses consist of the following (in thousands):

	December 31,
	2003	2002
Accounts payable	$1,987	$2,622
Accrued salaries, wages and
vacation pay	924	816
Other	763	562
	3,674	4,000
Pro-Bel Division		3,251
	$3,674	$7,251

11. LONG-TERM DEBT

At December 31, 2003, we had no outstanding indebtedness under credit facilities with lending institutions. At December 31, 2002, long-term debt consisted of the following (in thousands):

Graphics division:
Term loan (a)	$ 1,350
Revolving credit facility (a)	2,311
	3,661
Pro-Bel division:
Commercial mortgage term loan (b)	1,219
Trade finance facility (b)	1,347
	2,566
	6,227
Less amounts due in one year	(5,141)
	$ 1,086

(a) At December 31, 2002, we had a $5.3 million credit facility with a U.S. bank, under which we had a term loan and a revolving line of credit. During 2003, we made scheduled principal payments on the term loan until it was fully paid in September 2003. On November 13, 2003, we utilized a portion of the proceeds received upon the sale of our Pro-Bel Division to pay down the remaining balance on our revolving line of credit and terminated this facility with our U.S. bank. Interest was paid monthly at a rate of Prime +2% on the term loan and Prime +1% on the revolving line of credit. In addition, we paid monthly commitment fees equal to one half of 1% per annum of the daily unused portion of the facility which were not significant for any of the years presented.

(b) Pro-Bel had a commercial mortgage term loan and overdraft facility with a U.K. bank. As a condition of the sale of the Pro-Bel division, the mortgage and overdraft facility were paid in full at closing.

In March 2004, the Company received a commitment from a new U.S. bank for a $2.5 million working capital line of credit which extends through April 15, 2005. The Company will

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have the ability to borrow on a revolving credit basis based on levels of eligible accounts receivable. Interest will be payable at prime +2%, where prime is a minimum of 4%, and we will be required to maintain certain levels of tangible net worth.

12. SUBORDINATED CONVERTIBLE DEBENTURES

December 31,

2003

2002

Series A Convertible Debentures

$1,378

$1,385

Series B Convertible Debentures

7,299

8,187

Senior Notes



  2,486

$8,677

$12,058

During late 1998 and 1999 we raised $7.7 million through the issuance of Series A and Series B 8% Subordinated Convertible Debentures ("Series A and Series B Debentures"), due December 31, 2003, to certain persons and entities, including certain directors, affiliates and shareholders of the Company. The Series A Debentures, which totaled $1.2 million, paid interest quarterly and were convertible, at any time, at the option of the holders thereof, into common stock of the Company at a conversion price of $2.466 per share. Under the original terms, the Series B Debentures, which totaled $6.5 million, were convertible, at any time, at the option of the holders thereof, into common stock of the Company at a conversion price of $1.625 per share. Interest was payable quarterly and may be paid by increasing the amount of principal owed thereunder.

In connection with the amendment to the Series A and Series B Debentures, we issued warrants to holders of the amended Series A and Series B Debentures to purchase an aggregate of 861,027 shares of common stock of the Company at an exercise price equal to $0.35 per share. The fair value of the warrants of $0.13 million has been reflected as a discount to the related obligation, which will be amortized as additional interest expense over the life of the debenture. The warrants were valued using the Black-Scholes pricing model using the closing market price and the risk-free interest rate on their issue date. During 2003 and 2002 amortization expense was $0.04 million. The warrants were vested immediately and are exercisable through December 31, 2004.

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exchange resulted in cancellation of approximately 18.3% of the total of the debentures at their December 31, 2003 book value with $8.7 million of debentures still outstanding. The Company recorded a gain on extinguishment of debt, in accordance with SFAS No. 15, in its fourth quarter of 2003 of $0.6 million (net of transaction costs of $0.06 million). The gain from the transaction resulted in a decrease to the net loss per common share of $0.02 for the year ended December 31, 2003.

On February 27, 2004, we closed on a second exchange offer whereby Series A and B Debentures of $8.7 million ($8.8 million at January 31, 2004, including accrued paid in kind interest) were exchanged for $3.8 million in cash, and $2.3 million for new Series C Subordinated Convertible Debentures ("Series C Debentures") and $2.3 million for new Series D Subordinated Convertible Debentures ("Series D Debentures"). The Series C Debentures bear interest annually at 7%, payable in kind, will mature December 31, 2005 and can be converted to common stock at a per share conversion price of $1.50. The Series D Debentures bear interest annually at 8%, payable in kind, will mature December 31, 2006 and carry a per share conversion price of $0.65. All holders of Series C and Series D Debentures are beneficial owners or 5% or more of our common stock. In accordance with SFAS No. 15, no gain will be recorded on this transaction. Rather, interest expense will be adjusted prospectivel y in a manner to create a constant effective rate.

In December 2001, we completed a private placement of 12% Senior Subordinated Convertible Notes and received $2.21 million, exclusive of offering costs of $0.2 million, which were deferred and reflected as additional interest expense over the term of the Notes. These Senior Subordinated Notes matured December 31, 2003. Interest at 12% was payable in the form of additional senior notes. At December 31, 2003, the entire principal balance and interest was paid to note holders. Interest expense attributable to senior notes totaled $0.3 million in 2003 and 2002.

13. SHAREHOLDERS' (DEFICIT) EQUITY

Components and activity related to accumulated other comprehensive income is as follows (in thousands):

Accumulated

Foreign Currency

Net Unrealized

Other

Translation

Gain (Loss) on

Comprehensive

Adjustments

Marketable Securities

Income (Loss)

January 1, 2001

$ (414)

$ (134)

$ (548)

Change for period

(166)

(124)

(290)

December 31, 2001

(580)

(258)

(838)

Change for period

  202

    37

  239

December 31, 2002

(378)

(221)

(599)

Change for period

  378

   444

   822

December 31, 2003

$     0

$   223

$   223

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At December 31, 2003, the following warrants to purchase shares of our common stock were outstanding:

Warrants	Exercise Price	Expiration Date

123,631	$1.625	9/6/2004
60,000	1.120	3/29/2005
60,000	6.500	4/10/2005
151,914	6.500	4/11/2005
861,027	0.350	12/31/2004

14. LONG-TERM INCENTIVE PLAN

Incentive awards are provided to employees under the terms of our 1999 Incentive Compensation Plan. The Plan allows for the award of incentive and non-incentive options to employees and non-incentive options to non-employee members of our board of directors. The Plan is administered by a committee, designated by the board, to determine the time and circumstances under which an employee option may be exercised. Generally, options vest 1/3 each year, are fully vested three years from grant date and have a term of ten years. At December 31, 2003, there were 1.9 million shares available to be granted under the Plan.

Transactions involving stock options are summarized as follows:

Weighted

Range of

Average

Stock

Exercise

Exercise

Options

Price

Price

Outstanding

Per Share

Per Share

Exercisable

Balance at January 1, 2001

3,353,827

$0.75 - 16.13

$2.23

1,072,676

  Granted

1,697,500

0.32 - 2.13

0.92

  Exercised

(1,914)

0.75

0.75

  Canceled

(1,280,901)

0.55 - 5.38

2.08

Balance at December 31, 2001

3,768,512

0.32 - 16.13

1.70

2,088,347

  Granted

1,271,000

0.26 - 0.61

0.32

  Canceled

(257,180)

0.32 - 5.38

1.70

Balance at December 31, 2002

4,782,332

0.26 - 16.13

1.33

2,910,539

  Granted

575,001

0.16 - 0.51

0.30

  Exercised

(2,500)

0.26 - 0.32

0.30

  Canceled

(2,166,951)

0.26 - 5.88

1.32

Balance at December 31, 2003

   3,187,882

0.16 - 16.13

1.16

2,387,683

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The following table summarizes information concerning currently outstanding and exercisable stock options (thousands of shares):

	Options Outstanding			Options Exercisable
Range of		Average	Weighted		Weighted
Exercise Price	Options	Life	Average Price	Options	Average Price

$0.00 - $0.50	1,412	9.0	$0.31	686	$0.32
0.51 - 1.00	778	7.4	0.59	706	0.59
1.01 - 2.00	236	5.5	1.78	234	1.79
2.01 - 3.00	553	5.7	2.21	553	2.21
3.01 - 4.00	134	6.0	3.43	134	3.43
4.01 - 5.00	18	3.5	4.52	18	4.52
5.01 - 6.00	27	2.0	5.59	27	5.59
9.01 - 10.00	3	2.1	9.38	3	9.38
12.01 - 13.00	3	2.7	12.75	3	12.75
16.01 - 17.00	24	2.6	16.13	24	16.13
	3,188			2,388

If we had elected to recognize compensation expense based upon the fair values at the grant date for awards under this plan consistent with the methodology prescribed by SFAS No. 123, the effect on our net loss and net loss per share has been illustrated in our footnote entitled "Summary of Significant Accounting Policies." The pro forma amounts may not be representative of future disclosures since the estimated fair value of stock options is amortized to expense over the vesting period for purposes of future pro forma disclosures, and additional options may be granted in future years. The fair value of these options was estimated at the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions for 2003, 2002 and 2001: dividend yield of 0%; expected volatility of 125.0% in 2003, 125.1% in 2002 and 110.9% in 2001 and expected life of 4 years. The weighted average risk free interest rates for 2003, 2002 and 2001 were 2.88%, 3.08% and 4.25%, respectively. Using these assumptions, the weighted average grant date fair value of options granted during 2003, 2002 and 2001 was $0.24, $0.26 and $0.68, respectively.

The Black-Scholes option valuation model was developed for use in estimating the fair value of traded options which have no vesting restrictions and are fully transferable. In addition, option valuation models require the input of highly subjective assumptions including expected price volatility. Because our employee stock options have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, in management's opinion, the existing models do not necessarily provide a reliable single measure of the fair value of employee stock options.

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15. INCOME TAXES

The components of deferred income taxes are as follows (in thousands):

December 31,

2003

2002

Deferred tax assets:

   Net operating loss carryforwards

$21,177

$22,164

   Capital loss carryforwards

5,014

448

   Inventory

2,252

4,991

   Fixed assets and capitalized software

1,572

1,898

   Other liabilities

1,031

737

   Accounts receivable and other assets

     911

  1,438

31,957

31,676

Deferred tax liabilities:

   Other taxable temporary differences



     832

Deferred tax valuation allowance

31,957

30,844

$         0

$         0

At December 31, 2003, we had U.S. net operating loss carryforwards ("NOLs") of approximately $62 million expiring between the years 2004 through 2023. In connection with our emergence in 1991 from our reorganization under Chapter 11 of the U.S. Bankruptcy Code, the benefit of our pre-reorganization NOLs were not reflected in net income, but rather recorded as an increase to paid-in capital. In addition, such NOLs (approximately $13 million) are subject to annual limitations under U.S. income tax rules as a result of the changes in control of the Company.

Our net deferred tax assets include substantial amounts of net operating loss carryforwards. Inability to generate taxable income within the carryforward period would affect the ultimate realization of such assets. Consequently, management determined that sufficient uncertainty exists regarding the realization of these assets and established a full valuation allowance.

The effective income tax rate differed from the Federal statutory rate as follows (in thousands):

	2003		2002		2001
	Amount	%	Amount	%	Amount	%
Federal income tax benefit
at statutory rate	$(134)	(34.0)	$(1,035)	(34.0)	$(11,447)	(34.0)
Permanent differences	5	1.2	(138)	(4.5)	338	1.0
International rate differences	5,457	1,387.8	(317)	(10.4)	354	1.0
Effect of valuation allowance of
deferred tax assets	(5,337)	(1,357.0)	1,472	48.4	10,755	32.0
Other, net	9	2.0	18	0.5	0	0.0
	$ 0	0.0	$ 0	0.0	$ 0	0.0

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16. BENEFIT PLANS

Chyron Corporation has a domestic defined benefit pension plan (the "U.S. Pension Plan") covering substantially all U.S. employees meeting minimum eligibility requirements. Benefits paid to retirees are based upon age at retirement, years of credited service and average compensation. Pension expense is actuarially determined using the projected unit credit method. Our policy is to fund the minimum contributions required under the Employee Retirement Income Security Act. During 2004, we expect to contribute $0.6 million for the 2003 and 2004 plan years, based on these funding requirements. The assets of the U.S. Pension Plan at December 31, 2003 include equities, government and corporate fixed income securities, cash and cash equivalents. We use a December 31 measurement date to determine pension benefit obligations.

Benefit plan information for the U.S. Pension Plan is as follows (in thousands):

	2003	2002
Reconciliation of projected benefit obligation:
Obligation at January 1	$2,249	$2,093
Service cost	285	291
Interest cost	146	144
Actuarial losses	297	129
Benefit payments	(189)	(408)
Obligation at December 31	$2,788	$2,249

Reconciliation of fair value of plan assets:
Fair value of plan assets at January 1	$1,220	$1,281
Actual return on plan assets	86	(170)
Employer contributions	98	517
Benefit payments	(189)	(408)
Fair value of plan assets at December 31	$1,215	$1,220

Funded Status:
Funded status at December 31	$(1,573)	$(1,029)
Unrecognized prior-service cost	(341)	(375)
Unrecognized gain	(441)	(818)
Net amount recognized	$(2,355)	$(2,222)

2003

2002

2001

Components of net periodic pension cost:

  Service cost

$285

$291

$370

  Interest cost

146

144

126

  Expected return on plan assets

(109)

(131)

(119)

  Amortization of prior service cost

(34)

(34)

(34)

  Amortization of prior gain

(56)

(99)

(78)

  Net periodic benefit cost

$232

$ 171

$ 265

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	2003	2002	2001
Weighted-average assumptions used to determine
net periodic benefit cost for the years ended
December 31:
Discount rate	6.75%	7.25%	7.5%
Expected long term return on plan assets	8.50%	9.0%	9.0%
Rate of compensation increase	4.0%	4.5%	4.5%

Weighted-average assumptions used to determine
pension benefit obligation as of December 31:
Discount rate	6.00%	6.75%
Rate of compensation increase	4.0%	4.5%

The expected return on pension plan assets was based on the current interest rate environment, our pension plan investment guidelines, and our expectations for long-term rates of return. The overall investment objective is to achieve the highest level of return with the least amount of risk. It is desired that the aggregate investment portfolios achieve a return higher than the "market", with "market" being a benchmark equal to 80% of the arithmetic mean return of the Russell 2000 Index over three to five year rolling time periods. The real return objective of the total portfolio is CPI + 5% measured on an arithmetic means basis, annualized over a three to five year time period. Our target allocation for 2004 and actual pension plan asset allocations at December 31, 2003 and 2002 are as follows:

	Target	Actual
	Allocation	Allocation
Asset Category	2004	2003	2002
Equity securities	45%	53%	39%
Debt securities	45	43	23
Other	10	4	38
Total	100%	100%	100%

The accumulated benefit obligation was $2.26 million and $1.76 million at December 31, 2003 and 2002, respectively.

We have adopted a 401(k) Plan exclusively for the benefit of participants and their beneficiaries. All U.S. employees of Chyron Corporation are eligible to participate in the 401(k) Plan. An employee may elect to contribute a percentage of his or her current compensation to the 401(k) Plan, subject to a maximum of 20% of compensation or the Internal Revenue Service annual contribution limit, whichever is less. We may make discretionary contributions in the form of Company common stock of up to 20% of the first 10% of the compensation contributed by a participant. The charge to earnings for the cost of the matching contribution was $0.07 million, $0.07 million and $0.09 million in 2003, 2002 and 2001, respectively. Employees will vest in the matching contribution in equal increments annually over three years.

We also have several U.K. employees that are provided with pension benefits through the Chyron International Corporation Group Personal Pension Plan (the "CIC Pension Plan") which was established upon the sale of Pro-Bel. Under the CIC Pension Plan, each member has an

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individual account within the plan and the Company contributes monthly an amount equal to a percentage of his/her salary. New employees will receive an 8% of salary contribution.

Pro-Bel had a non-contributory defined benefit pension plan covering permanent employees hired prior to September 1, 1999. Along with the sale of the Pro-Bel Division in November 2003, the plan assets and the net benefit obligation were transferred as part of the sale.

Benefit plan information for the U.K. Pension Plan at December 31, 2002 is as follows (in thousands):

	2002
Reconciliation of projected benefit obligation:
Obligation at January 1	$13,013
Service cost	552
Interest cost	712
Actuarial gain	(436)
Benefit payments	(146)
Obligation at December 31	$13,695

Reconciliation of fair value of plan assets:
Fair value of plan assets at January 1	$14,337
Actual return on plan assets	186
Employer contributions	543
Benefit payments	(146)
Fair value of plan assets at December 31	$14,920

Funded status:
Funded status at December 31	$1,225
Unrecognized loss	2,352
Unrecognized prior-service cost	493
Effect of currency rate fluctuations	(182)
Net amount recognized	$3,888

17. COMMITMENTS AND CONTINGENCIES

At December 31, 2003, we were obligated under operating and capital leases covering facility space and equipment as follows (in thousands):

	Operating	Capital

2004	$414	$11
2005	408	8
2006	423
2007	433
2008	449
2009 thereafter	230

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The operating leases contain provisions for escalations and for facility maintenance. Total rent expense was $0.48 million, $0.43 million and $0.58 million for 2003, 2002 and 2001, respectively.

We generally provide warranties on all of our products ranging for one year. There may be, in certain instances, exceptions to these terms. Liabilities for the estimated future costs of repair or replacement are established and charged to cost of sales at the time the related sale is recognized. Warranty costs incurred have not been material in recent years. We record an estimate for future warranty costs based on return rates and other factors. The product warranty obligation included in accrued expenses at December 31, 2003 and 2002 was $0.05 million and $0.2 million, respectively.

We have severance arrangements for key and virtually all other employees of the Company that provide for payment of a portion of their salary and continuance of their benefits for their severance period, in the event they are involuntarily terminated. The severance periods range from a week to a number of months depending on the length of service and/or level of the employee within the Company. Had all such key and other covered employees been terminated at December 31, 2003, the estimated total severance would have approximated $1.4 million.

We, from time to time, are involved in routine legal matters incidental to our business. In the opinion of management, the ultimate resolution of such matters will not have a material adverse effect on our financial position, results of operations or liquidity.

18. RELATED PARTY TRANSACTIONS

The secretary of the Company, a non-executive position, is affiliated with a law firm that rendered various legal services to us for which we incurred costs of $0.3 million, $0.3 million and $0.5 million during 2003, 2002 and 2001, respectively. The balance owed for legal services was $0.03 million and $0.04 million at December 31, 2003 and 2002, respectively.

In November 2000, we purchased 20% of Video Technics, a supplier of certain hardware and software products. In connection with this investment, we have an exclusive arrangement to sell/license these products. For a time in 2001 and for years prior, we purchased both hardware and software from Video Technics. Currently, only software is purchased since we are manufacturing all hardware. The purchase price of the software is based on market conditions and competitive offerings. Purchases of Aprisa Clip/Stillstore products from Video Technics were approximately $0.7 million, $1.0 million and $1.3 million for the years ended December 31, 2003, 2002 and 2001, respectively. The balance owed to Video Technics for purchases was $0.2 million and $0.08 million at December 31, 2003 and 2002, respectively.

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Beginning in 2001 and ending in February 2003, when he became the President and Chief Executive Officer of the Company, Mr. Michael Wellesley-Wesley, then a member of our board of directors, was paid $15,000 monthly for consulting services, and was assigned a company automobile, for exploring strategic alternatives for the Company. During 2003, 2002 and 2001, the cost of these consulting services approximated $0.03 million, $0.18 million and $0.09 million, respectively.

19. SEGMENT INFORMATION

As a result of the sale of our Pro-Bel division in November 2003, the Company no longer has any reportable segments. For a portion of 2001, we did maintain a Streaming Services division that was closed in the second quarter of 2001.

Business Segment Information:

(In thousands)

Graphics

Streaming Services

Net sales 2001

$18,854

$   222

Operating loss 2001*

$(10,428)

$(12,750)

Depreciation and

   amortization 2001

$2,181

$  467

*Operating loss includes unusual charges in 2001 of $8,570.

Geographic Area Information:

2003

2002

2001

Revenues from external customers

   United States

$17,529

$15,958

$15,419

   United Kingdom

608

   Canada

1,339

795

   Switzerland

1,107

   France

979

671

   All other

  1,232

  1,680

  2,191

$19,369

$21,063

$19,076

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS

ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

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ITEM 9A. CONTROLS AND PROCEDURES

As of December 31, 2003, an evaluation was performed under the supervision and with the participation of the Company's management, including the Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO"), of the effectiveness of the design and operation of the Company's disclosure controls and procedures. Based on that evaluation, the Company's management, including the CEO and CFO, concluded that the Company's disclosure controls and procedures were effective as of December 31, 2003. There have been no significant changes in the Company's internal control over financial reporting during the most recent quarter that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The information called for herein will be presented under the captions ELECTION OF THE BOARD OF DIRECTORS and SECTION 16(a) REPORTING COMPLIANCE, in our definitive proxy statement to be filed with the Securities and Exchange Commission pursuant to Regulation 14A of the Exchange Act by April 29, 2004, in connection with the 2004 annual meeting of stockholders of Chyron ("Proxy Statement"), and is incorporated herein by reference in response to this item.

We have adopted a written code of ethics for senior financial officers which is included as Exhibit 14 to this report. The Company will provide to any person, without charge, a copy of such code of ethics, upon written request to: Ms. Margaret Roed, Chyron Corporation, 5 Hub Drive, Melville, NY 11747.

ITEM 11. EXECUTIVE COMPENSATION

The information called for herein will be presented under the captions EXECUTIVE COMPENSATION AND OTHER INFORMATION, STOCK PERFORMANCE CHART, COMPENSATION AND STOCK OPTION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION and COMPENSATION AND STOCK OPTION COMMITTEE REPORT ON EXECUTIVE COMPENSATION in our Proxy Statement, and is incorporated herein by reference in response to this item.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

AND MANAGEMENT

The information called for herein will be presented under the captions PRINCIPAL SHAREHOLDERS - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS and SECURITY OWNERSHIP OF MANAGEMENT in our Proxy Statement, and is incorporated herein by reference in response to this item.

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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information called for herein will be presented under the caption CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS in our Proxy Statement, and is incorporated herein by reference in response to this item.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

The information called for herein will be presented under the caption REPORT OF THE AUDIT COMMITTEE in our Proxy Statement, and is incorporated herein by reference in response to this item.

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULE AND

REPORTS ON FORM 8-K

(a) (1) Financial Statements

See index to Consolidated Financial Statements on page 40.

(2) Financial Statement Schedule

The following Consolidated Financial Statement schedule of Chyron Corporation and subsidiaries is included in Item 15(d) found on page 75.

Schedule II - Valuation and Qualifying Accounts for the Years Ended December 31, 2003, 2002 and 2001.

All other schedules called for under Regulation S-X are not submitted because they are not applicable or not required or because the required information is not material or is included in the Consolidated Financial Statements or notes thereto.

(3) Financial Statement Exhibits

See list of exhibits to the Financial Statements in Section (c) below.

(b) Reports on Form 8-K

A report on Form 8-K was filed on November 10, 2003, announcing the sale of all of the stock of the Company's wholly owned subsidiary, Chyron UK Holdings Limited and its operating subsidiary Pro-Bel Limited which constituted all of the Company's Signal Distribution and Automation business.

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A report on Form 8-K was filed on November 14, 2003, advising of a press release, on the same date, announcing the results of the Company's operations for the three and nine months ended, and financial condition as of September 30, 2003.

A report on Form 8-K was filed on November 21, 2003, which disclosed the details and provided Pro forma Financial Information related to the sale, on November 6, 2003, of the Company's wholly-owned subsidiary, Chyron UK Holdings Limited, including its operating subsidiary Pro-Bel Limited.

		Note
(c)	Exhibits

3.	Articles of Incorporation and By-Laws.
(a)	Restated Certificate of Incorporation of Chyron Corporation	(1)
(b)	Amended and Restated By-Laws of Chyron Corporation,
	adopted October 28, 1998	(4)
(c)	Amendment of Certificate of Incorporation of Chyron Corporation,
	adopted January 24, 1997	(3)

4.	Instruments defining rights of security holders, including debentures.
(a)	Form of 8% Subordinated Convertible Debenture Due
	December 31, 2003	(4)
(b)	Form of Subscription Agreement and Investment Representation for the
	purchase of the 8% Subordinated Convertible Debenture Due
	December 31, 2003	(4)
(c)	Form of 8% Series B Subordinated Convertible Debenture Due
	December 31, 2003	(5)
(d)	Form of Subscription Agreement and Investment Representation for the
	purchase of the 8% Series B Subordinated Convertible Debenture Due
	December 31, 2003	(5)
(e)	Form of 12% Senior Subordinated Convertible Note Due
	December 31, 2003	(6)
(f)	Form of Subscription, Subordination and Registration Rights Agreement
	for the purchase of the 12% Senior Subordinated Convertible Notes Due
	December 31, 2003	(6)
(g)	Form of Series A 12% Subordinated Convertible Debenture Due
	December 31, 2004	(6)
(h)	Form of Series B 12% Subordinated Convertible Debenture Due
	December 31, 2004	(6)
(i)	Form of Amendment to the 8% Subordinated Convertible Debentures
	Due December 31, 2003 and the Series B 8% Subordinated Convertible
	Debentures Due December 31, 2003	(6)
(j)	Form of Common Stock Purchase Warrant, Issued on
	December 17, 2001	(6)

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(k)	Notice of Amendment of each of the 12% Senior Subordinated Convertible
	Notes Due December 31, 2003, Series A 12% Subordinated Convertible
	Debentures Due December 31, 2004 and Series B 12% Subordinated
	Convertible Debentures Due December 31, 2004, Dated March 11, 2002	(6)
(l)	Form of Series C 7% Subordinated Convertible Debenture Due
	December 31, 2005	(8)
(m)	Form of Series D 8% Subordinated Convertible Debenture Due
	December 31, 2006	(8)

10.	Material Contracts.
(a)	Indemnification Agreement between Chyron Corporation and
	Donald P. Greenberg dated November 19, 1996	(3)
(b)	Indemnification Agreement between Chyron Corporation and
	Roger Henderson dated November 19, 1996	(3)
(c)	Indemnification Agreement between Chyron Corporation and
	Christopher R. Kelly dated July 18, 2002	(7)
(d)	Indemnification Agreement between Chyron Corporation and
	Wesley W. Lang, Jr. dated November 19, 1996	(3)
(e)	Indemnification Agreement between Chyron Corporation and
	Eugene M. Weber dated November 19, 1996	(3)
(f)	Indemnification Agreement between Chyron Corporation and
	Michael Wellesley-Wesley dated November 19, 1996	(3)
(g)	Indemnification Agreement between Chyron Corporation and
	Jerry Kieliszak dated July 18, 2002	(7)
(h)	Indemnification Agreement between Chyron Corporation and
	Jerry Kieliszak, Trustee, Chyron Corporation 401(k) Plan, effective
	March 1, 2002	(7)
(i)	Indemnification Agreement between Jerry Kieliszak, Trustee, and
	Chyron Corporation Employees' Pension Plan, effective March 1, 2002	(7)
(j)	Employment Agreement between Chyron Corporation and
	Michael Wellesley-Wesley, dated February 1, 2003	(7)
(k)	Separation Agreement between Chyron Corporation and
	Roger Henderson dated January 16, 2003	(7)
(l)	Separation Agreement between Chyron Corporation and
	Michael Knight dated February 11, 2004	(8)
(m)	Separation Agreement between Chyron Corporation and
	James Paul dated December 22, 2003	(8)
(n)	Employment Agreement between Chyron Corporation and
	Michael Wellesley-Wesley dated January 30, 2004	(8)

14.	Code of Ethics for Senior Financial Officers	(8)

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23.	Consent of PricewaterhouseCoopers LLP dated March 30, 2004	(8)

31.1	Certification of Chief Executive Officer pursuant to Section 302 of the
	Sarbanes-Oxley Act of 2002	(8)
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the
	Sarbanes-Oxley Act of 2002	(8)

32.	Certification of Chief Executive Officer and Chief Financial Officer
	pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	(8)

(1) Incorporated herein in its entirety by reference to the Annual Report for the fiscal year ended June 30, 1991 on Form 10-K dated January 31, 1992.

(2) Incorporated herein in its entirety by reference to the Annual Report for the fiscal year ended December 31, 1995 on Form 10-K dated March 14, 1996.

(3) Incorporated herein in its entirety by reference to the Annual Report for the fiscal year ended December 31, 1996 on Form 10-K dated March 20, 1997.

(4) Incorporated herein in its entirety by reference to the Annual Report for the fiscal year ended December 31, 1998 on Form 10-K dated March 30, 1999.

(5) Incorporated herein in its entirety by reference to the Annual Report for the fiscal year ended December 31, 1999 on Form 10-K dated March 9, 2000.

(6) Incorporated herein in its entirety by reference to the Annual Report for the fiscal year ended December 31, 2001 on Form 10-K dated April 1, 2002.

(7) Incorporated herein in its entirety by reference to the Annual Report for the fiscal year ended December 31, 2002 on Form 10-K dated March 31, 2003.

(8) Attached hereto in this Annual Report for the fiscal year ended December 31, 2003 on Form 10-K dated March 30, 2004.

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d) Financial Statement Schedules

Schedule II

CHYRON CORPORATION AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
(In thousands)

Column A	Column B	Column C	Column D	Column E

	Balance at	Charged to		Balance at
	Beginning	Costs and		End of
Description	of Period	Expenses	Deductions	Period

Reserves and allowances deducted from
asset accounts:

YEAR ENDED DECEMBER 31, 2003
Allowance for doubtful accounts(1)	$ 2,132		$1,155	$ 977
Inventory reserves(2)	14,830	(155)	9,155	5,520
Deferred tax valuation allowance(3)	30,844		(1,113)	31,957

YEAR ENDED DECEMBER 31, 2002
Allowance for doubtful accounts	$ 1,923	$ 248	$ 39	$ 2,132
Inventory reserves	14,568	327	65	14,830
Deferred tax valuation allowance	32,687		1,843	30,844

YEAR ENDED DECEMBER 31, 2001
Allowance for doubtful accounts	$ 2,274	$ 200	$ 551	$ 1,923
Inventory reserves	12,332	2,868	632	14,568
Deferred tax valuation allowance	21,932	10,755	0	32,687

(1) Approximately $0.9 million of this deduction results from the sale of our Pro-Bel Division.

(2) Approximately $1.3 million of this deduction results from the sale of our Pro-Bel Division. The balance results from the disposal of inventory items that were fully reserved.

(3) Approximately $6.1 million results from the tax loss generated in 2003, offset by a $5 million reduction attributable to the Pro-Bel Division.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	CHYRON CORPORATION

	/s/ Michael Wellesley-Wesley
	Michael Wellesley-Wesley
	President and
	Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below on March 30, 2004, by the following persons on behalf of the registrant and in the capacities on the date indicated.

/s/ Wesley W. Lang, Jr.		Chairman of the Board of Directors
Wesley W. Lang, Jr.

/s/ Dawn R. Johnston		Vice President and Corporate Controller
Dawn R. Johnston

/s/ Donald P. Greenberg		Director
Donald P. Greenberg

/s/ Roger Henderson		Director
Roger Henderson

/s/ Christopher R. Kelly		Director
Christopher R. Kelly

/s/ Jerry Kieliszak		Sr. VP and Chief Financial Officer
Jerry Kieliszak

/s/ Joan Y. McCabe		Director
Joan Y. McCabe

/s/ Eugene M. Weber		Director
Eugene M. Weber

/s/ Michael Wellesley-Wesley		President, CEO and Director
Michael Wellesley-Wesley

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EX-4.L 3 cdebenture1.htm SERIES C 7% SUBORDINATED CONVERTIBLE DEBENTURE SERIES C 7% SUBORDINATED CONVERTIBLE DEBENTURE
DUE DECEMBER 31, 2005

CHYRON CORPORATION

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AS SET FORTH IN THIS CERTIFICATE. THE SECURITIES REPRESENTED HEREBY MAY NOT BE SOLD, TRANSFERRED, OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR AN OPINION OF COUNSEL, REASONABLY ACCEPTABLE TO COUNSEL FOR THE COMPANY, TO THE EFFECT THAT THE PROPOSED SALE, TRANSFER, OR DISPOSITION MAY BE EFFECTUATED WITHOUT REGISTRATION UNDER THE ACT.

$___________	Melville, New York
No. C-	February 27, 2004

FOR VALUE RECEIVED, the undersigned, CHYRON CORPORATION, a New York corporation (the "Company"), hereby promises to pay to __________________________________or its permitted assigns (the "Holder") the principal sum of ______________________________________Dollars ($____________), together with interest thereon at the rate provided herein, and payable on the terms set forth below. This Debenture is one of an issue of Debentures of the Company designated as its Series C 7% Subordinated Convertible Debentures, Issued February 27, 2004, Due December 31, 2005 (the "Debentures") and which were issued as part of a recapitalization of debt previously issued.

SECTION 1. INTEREST; PAYMENT OF INTEREST AND PRINCIPAL.

1.1 Interest. This Debenture, issued as of the date hereof (the "Issue Date"), shall bear interest on the outstanding principal amount from February 1, 2004 until this Debenture is converted, exchanged, redeemed or paid in full, at an annual rate of 7% (computed on the basis of a 365-day year) (the "Interest Rate"). Interest on this Debenture shall be payable annually commencing on February 1, 2005, or upon conversion, redemption or at maturity of this Debenture, whichever occurs first. Until the Maturity Date, all interest payable hereunder, either in whole or in part, shall be satisfied by increasing the amount of principal owed hereunder to include the interest that is payable.

1.2 Principal. The principal on this Debenture shall be paid upon maturity of this Debenture, unless it has been converted, or redeemed in accordance with its terms prior thereto.

1.3 Maturity. All principal and unpaid interest on this Debenture shall be due on December 31, 2005 (the "Maturity Date"), except in the event of a Sale, as defined below. In the event of a Sale, this Debenture shall accelerate and become due and payable in full, including all interest accrued thereon, on the date of the closing of the Sale. A "Sale" shall mean: (i) any consolidation or merger of the Company with or into another corporation as a result of which holders of Common Stock immediately prior to such consolidation or merger shall hold less than 50% of the voting stock immediately following the completion of the merger or consolidation; or (ii) any sale or transfer of all or substantially all of the assets of the Company.

1.4 Manner of Payment. All payments of principal and interest shall be made in lawful money of the United States of America at the time of any such payment either by wire transfer to the account designated by the Holder for such purpose or by check mailed to the Holder at the address shown in the register maintained by the Company for such purpose, at the option of the Holder.

1.5 Subordination.

(a) Upon any distribution of assets of the Company in connection with any dissolution, winding-up or liquidation of the Company (whether or not in bankruptcy, insolvency or receivership proceedings or upon an assignment for the benefit of creditors) or any other marshaling of the assets and liabilities of the Company or upon the reorganization of the Company, the holders of Senior Indebtedness (as hereinafter defined) shall first be entitled to receive payment in full in money or money's worth, in accordance with the terms of such Senior Indebtedness, of all sums due in respect thereto, before the Holder shall be entitled to receive from the Company any payment hereunder and, upon such dissolution, winding-up, liquidation, marshaling of assets or reorganization, any payment from the Company to which the Holder would otherwise be entitled, except for the provisions hereof, shall be made by the person making such payment or distribution, whether an officer of the Company, an assignee, a trus tee in bankruptcy, debtor in possession, a receiver or liquidating trustee or otherwise (which person is hereby directed to make payment) to the holders of Senior Indebtedness to the extent necessary to pay in full in money or money's worth all Senior Indebtedness remaining unpaid after giving effect to any concurrent payment or distribution to the holders of such Senior Indebtedness, and to the full extent necessary for that purpose, the Holder hereby assigns to the holders of Senior Indebtedness all of the Holder's rights to any payments or distributions to which the Holder otherwise would be entitled from the Company.

(b) For purposes of this Debenture, the term "Senior Indebtedness" shall mean Indebtedness (as hereinafter defined) of the Company whether outstanding on the Issue Date of this Debenture or thereafter created, incurred, assumed or guaranteed (including, without limitation, interest that accrues on or after the filing of a petition in bankruptcy or for reorganization, if a claim for post-petition interest is allowed in such proceeding), except for: (i) any Indebtedness outstanding after the date of this Debenture as to which, by the express terms of the instrument creating or evidencing the same, it is provided that such Indebtedness is not senior or superior in right of payment to the Debentures, (ii) the Debentures, (iii) any Indebtedness of the Company owed to any Subsidiary or to any Affiliate of the Company, (iv) Indebtedness incurred in connection with the purchase of goods, assets, materials or services in the ordinary course of business or representing amounts recorded as accounts payable, trade payables or other current liabilities on the books of the Company (other than the current portion of any long-term Indebtedness of the Company that but for this clause (iv) would constitute Senior Indebtedness), (v) any Indebtedness of or amount owed by the Company to employees for services rendered to the Company, and (vi) the Series A 12% Debentures due December 31, 2004 (the "Series A Debentures"), the Series B 12% Debentures due December 31, 2004 (the "Series B Debentures") and the Series D 8% Debentures due December 31, 2006 (the "Series D Debentures"), if any, (collectively, the "Series A, B and D Debentures").

(c) "Indebtedness" is defined as, with respect to any person, any of the following (without duplication): (i) the principal of, premium, if any, and interest on and all other amounts owing with respect to any indebtedness (including any such indebtedness representing any deferred payment obligation for the payment of the purchase price of property or assets) of such person for money borrowed or evidenced by bonds, indentures, debentures or similar obligations, including any guaranty by such person of any indebtedness for money borrowed of any other person, whether any such indebtedness or guaranty is outstanding on the date of this Debenture or is thereafter created, assumed or incurred, (ii) the principal of, premium, if any, and interest on and all other amounts owing with respect to any indebtedness for money borrowed, incurred, assumed or guaranteed by such person in connection with the acquisition by it or any of its subsidiaries of any other businesses, properties or other assets, (iii) lease obligations which such person capitalizes in accordance with generally accepted accounting principles, and (iv) any amounts payable by such person under or in respect of any interest rate exchange agreement, interest rate swap agreement or other similar agreement entered into in respect of all or any portion of the above.

(d) "Subsidiary" or "Subsidiaries" shall mean any corporation or other organization, whether incorporated or unincorporated, in which the Company owns, directly or indirectly, any equity or other ownership interest and in which such ownership interest entitles the Company to elect a majority of the Board of Directors or similar governing body.

(e) "Affiliate" shall have the meaning set forth in Rule 144 promulgated under the Securities Act of 1933, as amended.

(f) Moreover, should it become necessary in any bankruptcy or other proceedings or in connection with any assignment for the benefit of the Company's creditors or the execution by the Company of any other creditor's agreement, or the dissolution of or the winding up of the Company's business, for the Holder to file one or more claims against the Company on account of or arising hereunder, the Holder will file such claim or claims and will assign to the holders of Senior Indebtedness the Holder's rights thereunder. If for any reason the Holder does not file such claim or claims, any holder of Senior Indebtedness shall have the right as the Holder's agent and attorney-in-fact, to sign and file such proof of claim in the Holder's name, or in the discretion of such holder of Senior Indebtedness, to assign the claim to and to file proof thereof in the name of the holders of Senior Indebtedness or their nominee.

(g) If, notwithstanding anything herein to the contrary, upon any such dissolution, winding-up, liquidation, marshaling of assets or reorganization, any payment or distribution of assets of the Company of any kind or character, whether in cash, property or security shall be received by the Holder before all Senior Indebtedness is paid in full in money or money's worth, such payment or distribution shall be held in trust by the Holder and, immediately upon notice to such effect from any holder of Senior Indebtedness, turned over by the Holder for payment on all Senior Indebtedness remaining until all such Senior Indebtedness shall have been paid in full in money or money's worth, after giving effect to any concurrent payment or distribution to the holders of such Senior Indebtedness.

(h) Neither the payments or distributions to the holders of Senior Indebtedness to which the Holder would be entitled except for the provisions hereof, nor the payment to the holders of Senior Indebtedness from the Holder pursuant to the provisions hereof, shall be deemed, as between the Company, its creditors (other than the holders of Senior Indebtedness) and the Holder, a payment by the Company to or on account of the Holder; it being understood that the provisions hereof are intended solely for the purposes of defining relative rights of the Holder on the one hand, and the holders of Senior Indebtedness on the other hand; and, except as otherwise expressly set forth herein, nothing contained herein is intended to or shall abrogate the obligations of the Company to pay the Holder or to affect the relative rights of the Holder and the creditors of the Company other than the holders of Senior Indebtedness.

(i) Until there shall occur a default under Senior Indebtedness (which shall include the occurrence of any event or existence of any circumstances as a result of which any amount is due and payable under any guarantee thereof), the Holder shall be entitled to receive and retain any payment of principal or interest made by the Company in respect of its obligations under this Debenture. In the event of and during the continuance of any such default, no payment of the principal of or interest on the Debenture shall be made by the Company or, to the extent made by the Company, retained by Holder. Specifically, except with the written consent of the holder or holders of all of the then-outstanding principal amount of Senior Indebtedness, the Holder may take no action against the Company to enforce payment of this Debenture (i) unless and until the holders of Senior Indebtedness shall have received payment in full of all principal and interest on such Senior Indebtedness, and/or (ii) for so lo ng as there is any obligation, absolute or contingent, under any guarantee of such Senior Indebtedness; provided, however, that nothing herein shall be deemed to affect the time at which an event of default occurs under the terms of the documents evidencing Senior Indebtedness.

(j) The Holder shall have no right of subrogation until such Senior Indebtedness has been paid in full. The subordination shall be effective notwithstanding the presence or absence of security granted to the holder of Senior Indebtedness with respect to its enforcement of any rights against the Company or against any security, or the intentional or unintentional release, waiver or compromise of any such claim.

1.6 Priority. The Debentures shall be equal to, or pari passu with, the Series A, B and D Debentures, as the same may be amended from time to time, with respect to any distribution of assets of the Company in connection with any dissolution, winding-up or liquidation of the Company.

SECTION 2. EVENTS OF DEFAULT

2.1 Nature of Events. An "Event of Default" shall exist if any of the following occurs and is continuing:

(a) Failure to pay interest on this Debenture on or before the date such payment is due and such failure to pay remains uncured for a period of 10 days after such date (whether or not such payment is prohibited by Section 1.5);

(b) Failure to pay principal on this Debenture on or before the date such payment is due (whether or not such payment is prohibited by Section 1.5);

(c) Failure to perform or observe any other covenant or agreement of the Company contained in this Debenture which remains uncured for the period and after the notice specified below and the holders of more than 50% of the outstanding principal amount of the Debentures then outstanding notify the Company of the default and the Company does not cure the default within 45 days after receipt of the notice, which notice must specify the default, demand that it be remedied and state that the notice is a "Notice of Default;"

(d) A custodian, receiver, liquidator or trustee of the Company, or of any of its property, is appointed or takes possession and such appointment or possession remains in effect for more than 60 days; or the Company is adjudicated bankrupt or insolvent; or an order for relief is entered under the Federal Bankruptcy Code against the Company; or any of the property of the Company is sequestered by court order and the order remains in effect for more than 60 days; or an involuntary petition is filed against the Company under any bankruptcy, reorganization, arrangement, insolvency, readjustment of indebtedness, dissolution or liquidation law of any jurisdiction, whether now or hereafter in effect, and is not dismissed within 60 days after filing;

(e) The Company files a petition in voluntary bankruptcy or seeking relief under any provision of any bankruptcy, reorganization, arrangement, insolvency, readjustment of indebtedness, dissolution or liquidation law of any jurisdiction, whether now or hereafter in effect, or consents to the filing of any petition against it under any such law; or

(f) The Company makes an assignment for the benefit of its creditors, or generally fails to pay its obligations as they become due, or consents to the appointment of or taking possession by a custodian, receiver, liquidator or trustee of the Company or all or any substantial part of its property; or

2.2 Default Remedies.

(a) In case an Event of Default (other than an Event of Default described in paragraphs (d), (e) and (f)) has occurred and is continuing, the holders of the Debentures, by notice to the Company from the holders of more than 50% of the principal amount of the Debentures then outstanding, may declare the principal of the Debentures, plus accrued interest, to be immediately due and payable, and upon any such declaration such principal and accrued interest shall become due and payable immediately. In case an Event of Default described in paragraphs (d), (e) and (f) occurs, such amounts will become due and payable without any declaration or any act on the part of the holders of the Debentures. Such declaration of acceleration may be rescinded and past defaults may be waived by the holders of at least 50% of the principal amount of the Debentures then outstanding as provided herein.

(b) No course of dealing or delay or failure on the part of the Holder to exercise any right under this Section 2.2 shall operate as a waiver of such right or otherwise prejudice such Holder's rights, powers and remedies. The Company will pay or reimburse the Holder, to the extent permitted by law, for all costs and expenses, including but not limited to reasonable attorneys' fees, incurred by it in collecting any sums due on this Debenture or in otherwise enforcing any of its rights.

(c) The holders of more than 50% of the principal amount of the outstanding Debentures may on behalf of the holders of all Debentures waive certain past defaults, except a default in payment of principal of or interest on any Debenture, or in respect of certain provisions of the Debentures which cannot be modified or amended without the consent of the holder of each outstanding Debenture affected thereby in accordance with Section 5.5.

SECTION 3. CONVERSION

3.1 Conversion Privilege. Subject to and upon compliance with the provisions of this Section 3, at the option of the Holder, this Debenture or any portion of the principal amount thereof, may, at any time and from time to time, be converted into fully paid and nonassessable whole shares of Common Stock of the Company, at the Conversion Price (as defined herein) in effect at the date of such conversion.

3.2 Manner of Exercise of Conversion Privilege. To exercise the conversion privilege, the Holder shall surrender this Debenture, together with a written conversion notice, in the form attached hereto, to the Company at its principal office. This Debenture or portion thereof shall be deemed to have been converted immediately prior to the close of business on the date of receipt of such Debenture and notice by the Company, even if the Company's stock transfer books are on that date closed, and the Holder, or the nominee or nominees of such Holder, shall be treated for all purposes as the record holder of the shares of Common Stock deliverable upon such conversion as of the close of business on such date. Promptly after receipt by the Company of this Debenture and proper notice, the Company shall issue and deliver, at its expense, to the Holder, or to the nominee or nominees of such Holder, a certificate or certificates for the number of shares of its Common Stock due on such conver sion. Interest shall accrue on the unpaid principal amount of this Debenture converted to the date of conversion, and the Company shall pay such interest at the time of conversion; provided, however, that in the case of a conversion of only a portion of the outstanding principal amount of this Debenture, the Company shall execute and deliver to the Holder (or its nominee or nominees), at the expense of the Company, a replacement Debenture in a principal amount equal to and in exchange for the unconverted portion of such Debenture and dated and bearing interest from the date to which interest has been paid on such Debenture or dated the date of such Debenture if no interest has been paid thereon.

3.3 Fractional Shares. No fractional shares of Common Stock shall be issued, at any time, upon conversion of this Debenture. Instead of any fractional share of Common Stock which would otherwise be issuable upon conversion of this Debenture, the Company shall pay a cash adjustment in respect of such fractional interest (in accordance with the Conversion Price, as defined herein, then in effect). The Holder, by its acceptance thereof, expressly waives any right to receive any fractional share upon conversion of this Debenture.

3.4 Conversion Price. The conversion price (the "Conversion Price") at which Common Stock shall be issuable upon the conversion of this Debenture shall initially be $1.50 in principal amount of this Debenture for each share of Common Stock; provided, however, that the Conversion Price and the conversion terms shall be subject to adjustment as follows:

(a) In the event the Company should at any time or from time to time after the Issue Date, fix a record date for the effectuation of a forward split or subdivision of the outstanding shares of Common Stock or the determination of holders of Common Stock entitled to receive a dividend or other distribution payable in additional shares of Common Stock or other securities or rights convertible into, or entitling the holder thereof to receive directly or indirectly, additional shares of Common Stock (hereinafter referred to as "Common Stock Equivalents"), without payment of any consideration by such holder for the additional shares of Common Stock or the Common Stock Equivalents (including the additional shares of Common Stock issuable upon conversion or exercise thereof), then, as of such record date (or the date of such dividend distribution, split or subdivision if no record date is fixed), the Conversion Price shall be appropriately decreased so that the number of shares of Commo n Stock issuable on conversion of this Debenture shall be increased in equal proportion to such increase of outstanding shares of Common Stock.

(b) If the number of shares of Common Stock outstanding at any time after the Issue Date is decreased by a combination of the outstanding shares of Common Stock, then following the record date of such combination, the Conversion Price shall be appropriately increased so that the number of shares of Common Stock issuable on conversion of this Debenture shall be decreased in equal proportion to such decrease in outstanding shares of Common Stock.

3.5 Other Distributions. In the event the Company shall declare a distribution payable in securities of other persons, evidences of indebtedness issued by the Company or other persons, assets (excluding cash dividends) or options or rights not referred to in subsection 3.4(a), then, in each such case for the purpose of this Section 3.5, the Holder, upon conversion of this Debenture, shall be entitled to a proportionate share of any such distribution as though it were the holder of the number of shares of Common Stock of the Company into which this Debenture was then convertible as of the record date fixed for the determination of the holders of Common Stock of the Company entitled to receive such distribution.

3.6 Fundamental Change. In the event that the Company shall be a party to (i) any recapitalization or reclassification of the Common Stock (other than a change in par value or as a result of a subdivision or combination of the Common Stock); or (ii) any compulsory share exchange, pursuant to any of which holders of Common Stock shall be entitled to receive other securities, cash or other property (each, a "Fundamental Change"), then appropriate provision shall be made so that the holder of each Debenture then outstanding shall have the right thereafter to convert such Debentures only into the kind and amount of the securities, cash or other property that would have been receivable upon such Fundamental Change by a holder of the number of shares of Common Stock issuable upon conversion of such Debenture immediately prior to such Fundamental Change at the Conversion Price (subject to adjustment pursuant to Section 3.4).

3.7 No Impairment. The Company will not, by amendment of its Certificate of Incorporation or through any reorganization, recapitalization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Company, but will at all times in good faith assist in the carrying out of all the provisions of this Section 3 and in the taking of all such action as may be necessary or appropriate in order to protect the conversion rights of the Holder of this Debenture against impairment.

3.8 Certificate as to Adjustments. Upon the occurrence of each adjustment or readjustment of the Conversion Price pursuant to this Section 3, the Company, at its expense, shall promptly compute such adjustment or readjustment in accordance with the terms hereof and prepare and furnish to the Holder a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based. The Company shall, upon the written request at any time of the Holder, furnish or cause to be furnished to such Holder a like certificate setting forth (A) such adjustment and readjustment, (B) the Conversion Price at the time in effect, and (C) the number of shares of Common Stock and the amount, if any, of other property which at the time would be received upon the conversion of the then outstanding principal amount of this Debenture.

3.9 Notices of Record Date. In the event of any taking by the Company of a record of the holders of any class of securities for the purpose of determining the holders thereof who are entitled to receive any dividend (other than a cash dividend) or other distribution, any right to subscribe for, purchase or otherwise acquire any shares of stock or any class of any other securities or property, or to receive any other right, the Company shall mail to the Holder, at least 20 days prior to the date specified therein, a notice specifying the date on which any such record is to be taken for the purpose of such dividend, distribution or right, and the amount and character of such dividend, distribution or right.

3.10 Reservation of Stock Issuable Upon Conversion. The Company shall at all times reserve and keep available out of its authorized, but unissued shares of Common Stock solely for the purpose of effecting the conversion of the aggregate principal amount of the Debentures such number of its shares of Common Stock as shall from time to time be sufficient to effect the conversion of the then outstanding aggregate principal amount of the Debentures; and if at any time the number of authorized, but unissued shares of Common Stock shall not be sufficient to effect the conversion of the then outstanding aggregate principal amount of the Debentures, in addition to such other remedies as shall be available to the Holder, the Company will promptly take all reasonable corporate action as may, in the opinion of its counsel, be necessary to increase its authorized, but unissued shares of Common Stock to such number of shares as shall be sufficient for such purposes.

SECTION 4. REDEMPTION

4.1 Call Provision. This Debenture may be redeemed by the Company at any time or from time to time commencing July 1, 2004, at the Company's sole option, in whole or in part, upon written notice to the registered Holder hereof at their last registered address, for the then outstanding principal of this Debenture, plus accrued and unpaid interest to the redemption date. Notice of redemption having been given as provided in Section 4.2, the Debentures to be redeemed, shall, on the redemption date, become due and payable at the redemption price therein specified, and from and after such date (unless the Company shall default in the payment of the redemption price and any accrued but unpaid interest) such Debentures shall cease to bear interest and the Company shall have no further obligation under such Debentures.

4.2 Notice of Redemption. Notice of redemption shall be given, in accordance with Section 5.4 hereof, not less than fifteen (15) nor more than forty-five (45) days prior to the redemption date, to each registered Holder of Debentures to be redeemed, at such Holder's address in the register maintained by the Company. All notices of redemption shall state: (a) the redemption date, (b) the redemption price, (c) if less than all the outstanding Debentures are to be redeemed, the principal amounts of the Debentures to be redeemed, (d) that on the redemption date the redemption price will become due and payable upon each Debenture (or portion thereof) to be redeemed and that interest thereon will cease to accrue on and after such said date, (e) the Conversion Price, the date on which the right to convert the principal of the Debentures to be redeemed will terminate and the manner in which such Debentures may be surrendered for conversion, and (f) the manner in which the Debentures are to be surrendered for payment of the redemption price.

4.3 Deposit of Redemption Price. On or prior to any redemption date, the Company shall segregate and hold in trust an amount of money sufficient to pay the redemption price of, and accrued but unpaid interest on, all Debentures to be redeemed on that date other than any Debentures called for redemption on that date which have been converted prior to the date of such deposit. If any Debenture called for redemption is converted, any money so segregated and held in trust for redemption of such Debenture(s) shall be discharged from such trust.

4.4 Debentures Redeemed in Part. Any Debenture which is to be redeemed only in part shall be surrendered to the Company at its principal office. In such instance, the Company shall execute and deliver to the Holder (or its nominee(s)), at the expense of the Company, a replacement Debenture in a principal amount equal to and in exchange for the unredeemed portion of such Debenture.

SECTION 5. MISCELLANEOUS

5.1 Successors and Assigns. The terms and conditions of this Debenture shall inure to the benefit of and be binding upon the respective successors and assigns of the parties. Nothing in this Debenture, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Debenture, except as expressly provided in this Debenture. This Debenture may not be assigned by the Holder hereof without the written consent of the Company.

5.2 Governing Law. This Debenture shall be governed by, and construed under the laws of the State of New York as applied to agreements entered into and to be performed entirely within New York, without giving effect to the laws of such State governing conflicts of laws.

5.3 Headings. The titles and subtitles used in this Debenture are used for convenience only and are not to be considered in construing or interpreting this Debenture.

5.4 Notices. All notices, authorizations, demands or requests required or permitted to be delivered to any party in connection with this Debenture shall be in writing and shall be deemed to have been duly given if personally delivered, if sent by facsimile transmission (with receipt confirmed by automatic transmission report), if sent by a nationally-recognized overnight courier with charges prepaid, if sent by registered or certified mail, return receipt requested and postage prepaid (or by the most nearly comparable method if mailed from or to a location outside the United States), addressed as follows:

If to the Company, to:

Chyron Corporation
5 Hub Drive
Melville, New York 11747
Attn: President
Fax: (631) 845-2058

With copies (which copies shall not constitute notice) to:

Thelen Reid & Priest LLP
875 Third Avenue
New York, New York 10022
Attn: Robert S. Matlin, Esq.
Fax: 212-603-2001

If to the Holder, to: the address shown in the register maintained by the Company for such purpose; or to such other address as the party to whom the notice is to be given may have furnished to the other party hereto in writing in accordance with the provisions of this Section 5.4. Any such notice or communication shall be deemed to have been received (i) in the case of personal delivery, on the date of such delivery, (ii) in the case of facsimile transmission (with receipt confirmed by automatic transmission report), on the date of such transmission, (iii) in the case of a nationally-recognized overnight courier, on the next business day after the date when delivered to such courier for overnight delivery, and (iv) in the case of mailing (or by the most nearly comparable method if mailed from or to a location outside the United States), on the third business day following that on which the piece of mail containing such communication is posted; provided, however, that three additional business days shall be added to the time any notice or communication sent from or to a location outside the United States shall be deemed to have been received in (iii) or (iv) above.

5.5 Amendments and Waivers. Any term of this Debenture may be amended or supplemented and the observance of any term of this Debenture may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and holders of at least a majority of the principal amount of the then outstanding Debentures; provided, however, that without the consent of each Holder of the Debentures affected, an amendment, waiver or supplement may not (i) extend the final maturity of any Debenture; (ii) reduce the principal amount of any Debenture; (iii) reduce the rate or extend the time of payment of any interest on any Debenture; (iv) impair or affect the right of any Holder of any Debenture to institute suit for the payment or conversion of any Debenture; (v) change the currency for payment of principal of, or interest on, any Debenture; or (vi) materially and adversely affect the right to convert the Debentures in accordance herewith; and further, provided, however, that an amendment, waiver or supplement may not reduce the percentage of Debentures, the consent of the Holders of which is required for any such supplemental indenture or waiver, without the consent of the Holders of all Debentures then outstanding.

5.6 Severability. If one or more provisions of this Debenture are held to be unenforceable under applicable law, such provision shall be excluded from this Debenture and the balance of this Debenture shall be interpreted as if such provision was so excluded and shall be enforceable in accordance with its terms.

5.7 Replacement of Debenture. If the Holder loses this Debenture, the Company shall issue an identical replacement Debenture to the Holder upon the Holder's delivery to the Company of a customary agreement to indemnify the Company for any losses resulting from issuance of the replacement Debenture.

5.8 Unsecured. This Debenture is an unsecured obligation of the Company.

IN WITNESS WHEREOF, CHYRON CORPORATION has caused this Debenture to be dated, executed and issued on its behalf by its officer or officers thereto duly authorized.

CHYRON CORPORATION

By:		By:
	Name: Jerry Kieliszak		Name: Michael Wellesley-Wesley
	Title: Senior Vice President and		Title: President and
	Chief Financial Officer		Chief Executive Officer

FORM OF
NOTICE OF CONVERSION OF
SERIES C 7% SUBORDINATED CONVERTIBLE DEBENTURE
OF CHYRON CORPORATION

Chyron Corporation
5 Hub Drive
Melville, New York 11747
Attention: President

Dear Sir:

I am the Holder of Chyron Corporation Series C 7% Subordinated Convertible Debenture number ____ (the "Debenture"). As of the date hereof, $___________ aggregate principal amount of the Debenture remains unconverted.

I hereby give notice to Chyron Corporation (the "Company") of my desire and intent to convert $____________ aggregate principal amount of the Debenture into common stock, par value $.01 per share, of the Company in accordance with the provisions of Section 3 of the Debenture.

			Very truly yours,


Date:
			Name:

EX-4.M 4 ddebenture1.htm SERIES D 8% SUBORDINATED CONVERTIBLE DEBENTURE SERIES D 8% SUBORDINATED CONVERTIBLE DEBENTURE
DUE DECEMBER 31, 2006

CHYRON CORPORATION

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AS SET FORTH IN THIS CERTIFICATE. THE SECURITIES REPRESENTED HEREBY MAY NOT BE SOLD, TRANSFERRED, OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR AN OPINION OF COUNSEL, REASONABLY ACCEPTABLE TO COUNSEL FOR THE COMPANY, TO THE EFFECT THAT THE PROPOSED SALE, TRANSFER, OR DISPOSITION MAY BE EFFECTUATED WITHOUT REGISTRATION UNDER THE ACT.

$__________	Melville, New York
No. D-	February 27, 2004

FOR VALUE RECEIVED, the undersigned, CHYRON CORPORATION, a New York corporation (the "Company"), hereby promises to pay to __________________________________or its permitted assigns (the "Holder") the principal sum of ______________________________________Dollars ($____________), together with interest thereon at the rate provided herein, and payable on the terms set forth below. This Debenture is one of an issue of Debentures of the Company designated as its Series D 8% Subordinated Convertible Debentures, Issued February 27, 2004, Due December 31, 2006 (the "Debentures") and which were issued as part of a recapitalization of debt previously issued.

SECTION 1. INTEREST; PAYMENT OF INTEREST AND PRINCIPAL.

1.1 Interest. This Debenture, issued as of the date hereof (the "Issue Date"), shall bear interest on the outstanding principal amount from February 1, 2004 until this Debenture is converted, exchanged, redeemed or paid in full, at an annual rate of 8% (computed on the basis of a 365-day year) (the "Interest Rate"). Interest on this Debenture shall be payable annually commencing on February 1, 2005, or upon conversion, redemption or at maturity of this Debenture, whichever occurs first. Until the Maturity Date, all interest payable hereunder, either in whole or in part, shall be satisfied by increasing the amount of principal owed hereunder to include the interest that is payable.

1.2 Principal. The principal on this Debenture shall be paid upon maturity of this Debenture, unless it has been converted, or redeemed in accordance with its terms prior thereto.

1.3 Maturity. All principal and unpaid interest on this Debenture shall be due on December 31, 2006 (the "Maturity Date"), except in the event of a Sale, as defined below. In the event of a Sale, this Debenture shall accelerate and become due and payable in full, including all interest accrued thereon, on the date of the closing of the Sale. A "Sale" shall mean: (i) any consolidation or merger of the Company with or into another corporation as a result of which holders of Common Stock immediately prior to such consolidation or merger shall hold less than 50% of the voting stock immediately following the completion of the merger or consolidation; or (ii) any sale or transfer of all or substantially all of the assets of the Company.

1.5 Subordination.

(b) For purposes of this Debenture, the term "Senior Indebtedness" shall mean Indebtedness (as hereinafter defined) of the Company whether outstanding on the Issue Date of this Debenture or thereafter created, incurred, assumed or guaranteed (including, without limitation, interest that accrues on or after the filing of a petition in bankruptcy or for reorganization, if a claim for post-petition interest is allowed in such proceeding), except for: (i) any Indebtedness outstanding after the date of this Debenture as to which, by the express terms of the instrument creating or evidencing the same, it is provided that such Indebtedness is not senior or superior in right of payment to the Debentures, (ii) the Debentures, (iii) any Indebtedness of the Company owed to any Subsidiary or to any Affiliate of the Company, (iv) Indebtedness incurred in connection with the purchase of goods, assets, materials or services in the ordinary course of business or representing amounts recorded as accounts payable, trade payables or other current liabilities on the books of the Company (other than the current portion of any long-term Indebtedness of the Company that but for this clause (iv) would constitute Senior Indebtedness), (v) any Indebtedness of or amount owed by the Company to employees for services rendered to the Company, and (vi) the Series A 12% Debentures due December 31, 2004 (the "Series A Debentures"), the Series B 12% Debentures due December 31, 2004 (the "Series B Debentures") and the Series C 7% Debentures due December 31, 2005 (the "Series C Debentures"), if any, (collectively, the "Series A, B and C Debentures").

(e) "Affiliate" shall have the meaning set forth in Rule 144 promulgated under the Securities Act of 1933, as amended.

1.6 Priority. The Debentures shall be equal to, or pari passu with, the Series A, B and C Debentures, as the same may be amended from time to time, with respect to any distribution of assets of the Company in connection with any dissolution, winding-up or liquidation of the Company.

SECTION 2. EVENTS OF DEFAULT

2.1 Nature of Events. An "Event of Default" shall exist if any of the following occurs and is continuing:

(b) Failure to pay principal on this Debenture on or before the date such payment is due (whether or not such payment is prohibited by Section 1.5);

2.2 Default Remedies.

SECTION 3. CONVERSION

3.2 Manner of Exercise of Conversion Privilege. To exercise the conversion privilege, the Holder shall surrender this Debenture, together with a written conversion notice, in the form attached hereto, to the Company at its principal office. This Debenture or portion thereof shall be deemed to have been converted immediately prior to the close of business on the date of receipt of such Debenture and notice by the Company, even if the Company's stock transfer books are on that date closed, and the Holder, or the nominee or nominees of such Holder, shall be treated for all purposes as the record holder of the shares of Common Stock deliverable upon such conversion as of the close of business on such date. Promptly after receipt by the Company of this Debenture and proper notice, the Company shall issue and deliver, at its expense, to the Holder, or to the nominee or nominees of such Holder, a certificate or certificates for the number of shares of its Common Stock due on such co nversion. Interest shall accrue on the unpaid principal amount of this Debenture converted to the date of conversion, and the Company shall pay such interest at the time of conversion; provided, however, that in the case of a conversion of only a portion of the outstanding principal amount of this Debenture, the Company shall execute and deliver to the Holder (or its nominee or nominees), at the expense of the Company, a replacement Debenture in a principal amount equal to and in exchange for the unconverted portion of such Debenture and dated and bearing interest from the date to which interest has been paid on such Debenture or dated the date of such Debenture if no interest has been paid thereon.

3.4 Conversion Price. The conversion price (the "Conversion Price") at which Common Stock shall be issuable upon the conversion of this Debenture shall initially be $0.65 in principal amount of this Debenture for each share of Common Stock; provided, however, that the Conversion Price and the conversion terms shall be subject to adjustment as follows:

SECTION 4. REDEMPTION

SECTION 5. MISCELLANEOUS

5.3 Headings. The titles and subtitles used in this Debenture are used for convenience only and are not to be considered in construing or interpreting this Debenture.

If to the Company, to:

Chyron Corporation
5 Hub Drive
Melville, New York 11747
Attn: President
Fax: (631) 845-2058

With copies (which copies shall not constitute notice) to:

Thelen Reid & Priest LLP
875 Third Avenue
New York, New York 10022
Attn: Robert S. Matlin, Esq.
Fax: 212-603-2001

If to the Holder, to: the address shown in the register maintained by the Company for such purpose; or to such other address as the party to whom the notice is to be given may have furnished to the other party hereto in writing in accordance with the provisions of this Section 5.4. Any such notice or communication shall be deemed to have been received (i) in the case of personal delivery, on the date of such delivery, (ii) in the case of facsimile transmission (with receipt confirmed by automatic transmission report), on the date of such transmission, (iii) in the case of a nationally-recognized overnight courier, on the next business day after the date when delivered to such courier for overnight delivery, and (iv) in the case of mailing (or by the most nearly comparable method if mailed from or to a location outside the United States), on the third business day following that on which the piece of mail containing such communication is posted; provided, however, that thr ee additional business days shall be added to the time any notice or communication sent from or to a location outside the United States shall be deemed to have been received in (iii) or (iv) above.

5.8 Unsecured. This Debenture is an unsecured obligation of the Company.

IN WITNESS WHEREOF, CHYRON CORPORATION has caused this Debenture to be dated, executed and issued on its behalf by its officer or officers thereto duly authorized.

CHYRON CORPORATION

By:		By:
	Name: Jerry Kieliszak		Name: Michael Wellesley-Wesley
	Title: Senior Vice President and		Title: President and
	Chief Financial Officer		Chief Executive Officer

FORM OF
NOTICE OF CONVERSION OF
SERIES D 8% SUBORDINATED CONVERTIBLE DEBENTURE
OF CHYRON CORPORATION

Chyron Corporation
5 Hub Drive
Melville, New York 11747
Attention: President

Dear Sir:

I am the Holder of Chyron Corporation Series D 8% Subordinated Convertible Debenture number ____ (the "Debenture"). As of the date hereof, $___________ aggregate principal amount of the Debenture remains unconverted.

			Very truly yours,


Date:
			Name:

EX-10.L 5 knightsev2.htm Comp Ag. ProBel / Knight

Chyron International Corporation

-and-

MICHAEL KNIGHT

COMPROMISE AGREEMENT

WITHOUT PREJUDICE

AND

SUBJECT TO CONTRACT

THIS AGREEMENT is made on the 11 day of February 2004

BETWEEN: -

1. Chyron International Corporation, Danehill, Lower Earley, Reading, Berkshire, RG6 4PB (the "Company"); and

2. Michael Knight, Wasdale House, St Pauls Road, Woking, Surrey, GU22 7DZ (the "Employee").

RECITALS

(A) The Employee is employed by the Company under the terms of a contract of employment dated 13 September 1996 as amended on 6 November 2003 made between the Company and the Employee;

(B) The Company is entering into this Agreement for itself and as agent for its holding Company and subsidiaries within the meaning given by Section 736 of the Companies Act 1985 ("Associated Companies") and is duly authorised on their behalf;

(C) The Employee has received independent legal advice from a qualified lawyer as to the terms and effect of this Agreement.

IT IS AGREED as follows:

1 TERMINATION OF EMPLOYMENT

The Employee's employment with the Company is deemed to have terminated on 31 January 2004.

2 PAYMENT OF SALARY AND BENEFITS

2.1 The Company will pay to the Employee his normal remuneration including his accrued but untaken 13 days holiday pay and benefits including his monthly Car Allowance of GBP792 per month up to and including the Termination Date (less such sums as the Company is obliged by law to deduct by way of income tax and employee National Insurance contributions).

2.2 The Company confirms that it will either: -

2.2.1 at the Employee's option exercisable on notice on the Termination Date maintain the private health insurance cover for the Employee (as enjoyed by the Employee during his employment) for a period of six months from the Termination Date subject to the rules of the Scheme. The Employee acknowledges that in relation to the above benefit as is subject to liability for income tax during his employment and referred to in P11D's issued to him from to time in each tax year, he shall in connection with any income tax return to the Inland Revenue for the tax year 2003/2004 disclose the receipt by him of such above benefit as part of the overall compensation for loss of employment paid and/or provided to him in connection with the termination of his employment under the provisions of this Agreement; or

2.2.2 pay the Employee within 14 days of the Termination Date a sum equivalent to the cost to the Company of providing this benefit to the Employee as compensation for the loss of such benefits, which sum will be added to and form part of the Compensation Payment in Clause 3.1

2.3 The Company confirms that it will extend the Employee's Life Assurance cover and that a single employer's contribution will be made to the Employee's personal pension scheme in the sum of GBP10,307.58 (being equivalent to 16.6% of the Employee's gross salary per month until 31 July 2004 inclusive).

2.4 The Company shall pay the Employee within 14 days of the Termination Date GBP4,752 being a sum equal to the total aggregate of the monthly Car Allowance of GBP792 per month for 6 months from the Termination Date. The Employee acknowledges that in relation to the above benefit as is subject to liability for income tax during his employment and referred to in P11D's issued to him from to time in each tax year, he shall in connection with any income tax return to the Inland Revenue for the tax year 2003/2004 disclose the receipt by him of such above benefit as part of the overall compensation for loss of employment paid and/or provided to him in connection with the termination of his employment under the provisions of this Agreement.

3 COMPENSATION FOR LOSS OF EMPLOYMENT

3.1 As compensation for the termination of the Employee's employment (and provided that the Employee has returned to the Company a copy of this Agreement signed by him and his advisor and subject, at all times, to the Employee's continued compliance with the terms of this Agreement) the Company shall pay to the Employee the sum of GBP39,250 as compensation for the termination of his employment (the "Compensation Payment"). The Compensation Payment shall be paid within 14 days following the Termination Date and receipt by the Employee of a form P45;

3.2 The first GBP30,000 of the Compensation Payment will be paid by the Company without deductions for income tax or employee National Insurance contributions (to the extent this is permitted by law.)

4 Special Bonus and stock options

4.1 The Company shall pay within 14 days of the Termination Date to the Employee a one time special bonus equal to GBP14,166 (less deductions for PAYE income tax and employee National Insurance contributions.

4.2 The Company confirms that it will fully vest and extend selected option grants according to Schedule 3, through 31 December 2004, being the Stock option vesting/exercise period.

5 TAX INDEMNITY

5.1 The parties believe that the first GBP30,000 of the Compensation Payment can be paid without any deduction of tax or National Insurance Contributions, as it is a payment made in compensation for loss of employment. The Compensation Payment will therefore be paid to the Employee on the basis that this element of the Compensation Payment is tax-free (and as provided for in Clause 3.2 above) but the Company gives no warranty to this effect.

5.2 The Employee agrees that he will be responsible for the payment of any tax and other statutory deductions in respect of all or part of the Compensation Payment. The Employee agrees to indemnify the Company and each and every Associated Company on a continuing basis against all such liabilities (other than as may be prohibited by law and including, but not limited to, any interest, penalties, costs and expenses), which the Company or any Associated Company may incur by reason of the Compensation Payment. If the Company or any Associated Company is notified by the Inland Revenue or any other public authority of any claim that any such liabilities exist or may exist it will provide relevant details to the Employee so that he has the opportunity at his own expense to dispute any such payments with the Inland Revenue or other relevant authority.

6 COMPANY PROPERTY

6.1 Save as provided in Clause 6.2 below the Employee warrants that on or before the Termination Date he will return to the Company all documents and correspondence (including copies), keys, electronic passes, documents, recordings, photographs, laptop computer, computer software and hardware, computer discs, microfiches, mobile telephone, company credit or charge cards and any other property belonging to the Company or any Associated Company including any copies thereof. The Employee further warrants the he holds no copies of downloaded information or software belonging to the Company or any Associated Company and that he has disclosed all passwords or computer access codes pertaining to Company or any Associated Company equipment.

7 EXPENSES

7.1 The Company will reimburse the Employee for all expenses reasonably and properly incurred and accounted for in connection with the Employee's employment up to and including the Termination Date.

8 WAIVER OF CLAIMS

8.1 The Employee agrees to accept the Compensation Payment in full and final settlement of all claims listed below, whether at Common Law, under statute or pursuant to European Community Law which he has, or may have, against the Company, its officers, employees and ex-employees arising directly or indirectly from the Employee's employment by the Company or its termination for: -

i. unfair dismissal

ii. redundancy

iii. any bona fide expenses

iv. wrongful dismissal

v. breach of contract

vi. breach of the Transfer of Undertakings (Protection of Employment) Regulations 1981

vii. breach of the Working Time Regulations 1998

viii. breach of the Transnational Information and Consultation of Employees Regulations 1999

ix. race, sex and disability discrimination

x. personal injury claims that the Employee is aware of or should reasonably be aware of at the time of signing this Agreement.

8.2 The Employee warrants that he has no claims for holiday pay, outstanding pay, overtime, bonuses or commission or unlawful deductions from wages and, further, that he has raised any and all claims that he has or may be entitled to make against the Company in respect of his employment and its termination, whether contractual, statutory or otherwise and that other than the claims listed at sub-clause 8.1 above he warrants that he has no further claims or potential claims against the Company.

8.3 The Employee warrants that he has not and undertakes that he will not commence any legal or arbitration proceedings of any nature against the Company or any Associated Company in any jurisdiction in relation to his employment with the Company or any Associated Company and/or the termination of such employment.

9 REFERENCE

In consideration for the provisions of Clause 13 below, the Company agrees to provide a full and fair reference reflecting the Employee's true performance and track record if so requested by a prospective future Employer.

10 RESIGNATION FROM OFFICE

The Employee will provide to the Company his written resignation from the offices that he holds with the Company and any of its Associated Companies in the forms attached at Schedule 1 with effect from the Termination Date and shall execute such documents and do such other things as are necessary to give effect to such resignation.

11 FULL DISCLOSURE

The Employee warrants that he has made a full and frank disclosure to Michael Wellesley- Wesley of all material matters which might reasonably affect the willingness of the Company or any Associated Company to enter into this Agreement.

12 RESTRICTIONS ON DISCLOSURE

The Employee warrants that he will not hold himself out as representing the Company or any Associated Company or make to any third party any critical, misleading, untrue or derogatory remarks, comments or statements (whether orally or in writing) about the Company or any Associated Company or their officers, employees, investors, shareholders, suppliers, customers or clients.

13 CONFIDENTIALITY

13.1 In consideration of the Company agreeing to provide a prospective employer with an employer's reference reflecting the Employee's true performance and track record upon request the Employee acknowledges that: -

13.1.1 he continues to be bound by his implied duties as to confidentiality in respect of Confidential Information (including all private, confidential and/or secret information concerning the Company's or any Associated Company's business, business relationships or financial affairs, details of which are not in the public domain or generally known, such information being highly sensitive and highly confidential by reason of the damage that could be done to the Company's or any Associated Company's business to any disclosure to or use by any third party of any such information; and

13.1.2 he will not disclose the fact or contents of this Agreement without the prior written consent of the Company except to his partner or his professional advisers, the Inland Revenue or as otherwise required by law, and that he will otherwise make no statement or remark to any person or body (including, but not limited to, the press or other media) relating to the termination of his employment or this Agreement.

14 EMPLOYEE'S INDEPENDENT LEGAL ADVICE

14.1 The Employee warrants that he has before signing this Agreement taken advice from Nick Hobden of Thomson, Snell and Passmore (the "Legal Adviser") on the terms and effect of this Agreement and in particular its effect on his ability to pursue a complaint before an Employment Tribunal or a court.

14.2 It is a condition of this Agreement that the Employee's Legal Adviser provides the Certificate annexed to this Agreement at Schedule 2, for which in return the Company will pay upon presentation by the Legal Adviser an invoice made out to the Employee (but expressed to be payable by the Company) in the sum of GBP450 plus VAT in respect of the Employee's legal costs.

15 EMPLOYMENT LEGISLATION

15.1 The Company and the Employee confirm that the conditions regulating this Agreement under Section 203 of the Employment Rights Act 1996, Section 77 of the Sex Discrimination Act 1975, Section 72 of the Race Relations Act 1976, Section 288 of the Trade Union and Labour Relations (Consolidation) Act 1992, Section 9 Disability Discrimination Act 1995 and Section 35 of the Working Time Regulations 1998 are satisfied.

16 MISCELLANEOUS PROVISIONS

16.1 In this Agreement "Associated Company" includes the Company, Pro-bel Limited and any company forming part of the Chyron Corporation which from time to time is a subsidiary or a holding company of the Company or a subsidiary of such holding company and "subsidiary" and "holding company" will have the meanings attributed to them by Section 736 of the Companies Act 1985.

16.2 If the Employee: -

(i) breaches any material term of this Agreement and/or;

(ii) in breach of this Agreement commences proceedings against the Company or any Associated Company;

then he agrees to immediately repay upon request by the Company a sum equal to the loss suffered by the Company or any Associated Company which in the reasonable opinion of the Company's board the Company or the Associated Company has sustained as a result of any breach by the Employee of (i) above and/or the amount sought by the Employee by way of compensation or damages as a result of action anticipated in (ii) above. The Employee agrees and accepts that any such sums shall be recoverable as a debt.

16.3 This Agreement shall be construed in accordance with the law of England and Wales and the parties submit to the exclusive jurisdiction of the English and Welsh courts.

16.4 This Agreement although marked "without prejudice" and "subject to contract" will upon signature by all parties be treated as an open document evidencing an agreement binding on the parties.

16.5 This Agreement may be executed by the parties in counterpart which taken together shall constitute one agreement.

SIGNED by

For and on behalf of Chyron International /s/ M. I. Wellesley-Wesley

M. I. Wellesley-Wesley

in the presence of: /s/ Peter Ead

Peter Ead

SIGNED by /s/ Michael Knight

MICHAEL KNIGHT

in the presence of /s/ Peter Ead

Peter Ead

SCHEDULE 1

Wasdale House

St Pauls Road

Woking

Surrey GU22 7DZ

The Directors

Chyron Streaming Services Limited

Danehill

Lower Earley

Reading

Berkshire

RG6 4PB

Dear Sirs

I hereby resign effective from 31 January 2004 as a director of Chyron Streaming Services Limited and confirm that I have no claim for compensation for such loss of office except as set out in the Agreement between the Company and I dated 31 January 2004.

Yours faithfully

/s/ Michael Knight

MICHAEL KNIGHT

SCHEDULE 2

I, Nicholas Hobden, Partner in the firm of Thomson Snell and Passmore of 3 Lonsdale Gardens, Tunbridge Wells, Kent, TN1 1NX hereby confirm as follows:

1. I have given independent legal advice to Michael Knight as to the terms and effect of the agreement to which this Certificate is scheduled, and in particular its effect on his ability to pursue his rights, if any, before an Employment Tribunal.

2. I am a Solicitor of the Supreme Court, that I hold a current Practising Certificate and that the statutory requirements of Section 203 of the Employment Rights Act 1996, Regulation 35 of the Working Time Regulations, Section 77 of the Sex Discrimination Act 1975, Section 72 of the Race Relations Act 1976 and Section 9(3) of the Disability Discrimination Act 1995 relating to Compromise Agreements have been met.

3. I am not acting (and have not acted) in relation to this matter for the Company or any Associated Company.

4. That at the date I gave the advice and as at the date hereof this firm was and is covered by a contract of insurance or other appropriate indemnity as required by Section 203(2)(d) of the Employment Rights Act 1996 which covers the risk of a claim by Michael Knight in respect of any loss arising in consequence of that advice.

SIGNED:/s/ Nicholas Hobden

Nicholas Hobden

Solicitor of the Supreme Court

Dated 11 February 2004

SCHEDULE 3

	Grant Date	Option Amount	Option Price
1.	10/27/99	10,000	$0.75
2.	07/25/01	30,000	$0.55
3.	12/13/02	40,000	$0.27
4.	11/07/03	25,000	$0.35

EX-10.M 6 paulsev1.htm Date

November 13, 2003

James M. Paul

100 Lucinda Drive

Babylon, NY 11702

Dear Jim:

I am writing to set forth the terms and conditions of your separation from Chyron Corporation, and to completely and finally resolve any matters arising out of your employment or termination thereof.

Your employment with the Company will be terminated effective November 7, 2003. You will receive your regular salary, unused accrued vacation (maximum of 4 weeks) and unused accrued sick (maximum of 10 days). You hereby agree to return any Company property in your possession, or under your control, including but not limited to, any computers, cellular phones or Company credit cards. You acknowledge that you are bound by the Non-Competition and Confidential Information provisions of your Employment Agreement. You will be eligible to continue medical coverage pursuant to COBRA. Information concerning this coverage will be provided under separate cover.

In return and as consideration for the complete release of any and all claims as set forth below, the Company will provide you with the following separation package:

nine months of severance, $161,250 (less statutory deductions and withholding) payable in one installment on December 31, 2003.

loyalty bonus equal to three months salary, $53,750 (less statutory deductions and withholding) payable in one installment on December 31, 2003.

annual bonus, $13,875 (based on the 25% of 2003 bonus target that is based on your individual performance objectives, rather than the balance that is based on company financial objectives that will not be achieved and less statutory deductions and withholding) payable in one installment on December 31, 2003.

deferred salary payment, $94,675.44 - payable in one installment on November 19, 2003.

payment of COBRA continuation coverage premiums for up to nine months, unless you become eligible for other insurance coverage prior to the expiration of nine months.

As consideration and inducement to grant you the separation package described above, you unconditionally release the Company, its subsidiaries, partners, affiliates, directors, officers, managers and employees from any claims, complaints or grievances of any nature whatsoever arising out of or which are in any way related to your employment with Chyron Corporation, your compensation for services performed or the termination of your relationship with the Company including, but not limited to, all claims of discrimination in employment including, but not limited to, those arising under the Age Discrimination in Employment Act, Americans with Disabilities Act, Title VII of the Civil Rights Act of 1964, as Amended, the Employee Retirement Income Security Act of 1974, the Fair Labor Standards Act, as amended, and all other federal, state and local equal employment, fair employment, workers compensation, civil or human rights laws, codes and ordinances, any claims based upon contract, written or oral, express or implied, tort or wrongful discharge, any and all claims for compensation, bonuses, incentive compensation, employee benefits of any type or amounts in excess of those specified in this letter agreement, excluding any claim to enforce your rights under this letter agreement.

You agree that the terms of this agreement and any fact concerning its negotiation, execution or implementation shall remain confidential and shall not be disclosed to third parties (except to (i) your attorney, (ii) accountant, tax or other financial advisor, or (iii) your spouse), and that neither party shall make any statement written or oral directly or indirectly which in any way disparages, embarrasses or criticizes the other or with respect to the Company, its subsidiaries, partners, affiliates, employees, officers or directors. You further agree that you will not encourage, assist, and or participate in the pursuit of any claims brought against the Company by any other individuals or entity except in response to a lawfully issued subpoena.

In the event that any claim against the Company is made by you in violation of the release herein, or in the event there is a breach of the confidentiality or non-disparagement provisions set forth immediately above, the payments provided to you pursuant to this agreement will be returned to the Company. The Company will also be entitled to injunctive relief with respect to these provisions.

By signing and returning this letter agreement, you acknowledge that you:

a) have carefully read and fully understand the terms of this letter agreement and have been given a reasonable period of time to consider it;

b) are entering into this letter agreement voluntarily and knowing that you may be releasing claims that you have or believe you may have against the company;

c) have hereby been advised by this letter that you have the right to consult with counsel of your choosing prior to signing this letter agreement;

d) are giving this release of claims in return for consideration to which you otherwise would not have been entitled.

This letter agreement sets forth the entire agreement between the Company and you regarding your separation from the Company and supersedes and replaces any prior written or oral understandings which may have existed. No representative of the Company has the authority to verbally excuse, amend or modify any portion of this letter agreement. If any provision of this letter agreement or the release contained herein is determined to be invalid or unenforceable, the remainder of the letter agreement or release other than such provision will not be affected and will remain in full force and effect. This agreement will be construed and governed in accordance with the laws of the State of New York.

If you agree with the terms of this letter, please sign and return it within (21) days of your receipt of this agreement. If this Agreement is not executed by you after the expiration of twenty-one (21) days after your receipt, it will be of no force and effect. You have the right to revoke this agreement by delivering a written notice of revocation to us within seven (7) days of your signing this agreement.

We wish you the best of luck in your future endeavors and thank you for your contributions to the Company.

Very truly yours,

Chyron Corporation

/s/ Michael Wellesley-Wesley

By: Michael Wellesley-Wesley

CEO & President

ACCEPTED AND AGREED:

/s/ James M. Paul

James M. Paul

Date: 12 - 22 , 2003

EX-10.N 7 mww04employ1.htm EMPLOYMENT AGREEMENT employment agreement

THIS AGREEMENT (the "Agreement") is being made as of January 30, 2004, by and between CHYRON CORPORATION, a New York corporation (the "Company"), having its principal offices at 5 Hub Drive, Melville, New York 11747, and MICHAEL WELLESLEY-WESLEY ("MWW") having an address at Hall Farm House, Little Massingham, King's Lynn, Norfolk, PE322JR, United Kingdom.

W I T N E S S E T H:

WHEREAS, the Company desires to continue to employ MWW as its Chief Executive Officer and President (the "CEO"), and MWW desires to continue to hold such positions, subject to and upon the terms and conditions contained herein; and

WHEREAS, the Company and MWW have previously entered into an Employment Agreement, dated February 1, 2003, which is expiring February 21, 2004 (the "2003 Agreement"), and the parties wish to enter into this Agreement as the successor employment agreement between the parties.

NOW, THEREFORE, in consideration of the mutual premises and agreements contained herein, and intending to be legally bound hereby, the parties hereto agree as follows:

Nature of Employment: Term of Employment

. The Company hereby agrees to continue to employ MWW and MWW agrees to continue to serve the Company as its CEO, upon the terms and conditions contained herein, for a term commencing on February 21, 2004 (the "Commencement Date") and continuing until February 21, 2005 (the "Employment Term"). The Employment Term may be extended for a one-year period (the "Extended Employment Term") only upon both parties' consent.

Duties and Powers as Employee

During the Employment Term, MWW shall be employed by the Company as CEO, which position is, and shall remain at all times during the Employment Term, the senior executive officer position of the Company. MWW shall devote his full working time to his duties as CEO. In performance of his duties, MWW shall report directly to and be subject to the direction of the Board of Directors of the Company or any Committee thereof, including, without limitation, the Office of the Chairman. As CEO, MWW shall have all the responsibilities, duties and authority as are generally associated with the position of CEO of a public company, including full executive power over, and responsibility for, managing, directing and supervising all aspects of the business of the Company worldwide. The CEO shall also be responsible for developing the business plan and objectives of the Company and managing the execution of such plan in conjunction with the Office of the Chairman, or similar committee or office cre ated by the Board of Directors.

As CEO, MWW shall travel in accordance with the reasonable needs of the business, which shall require him to conduct business for the Company primarily in Melville, New York and such other locations as he deems necessary.

Compensation

As compensation for his services hereunder, the Company shall pay MWW, during the Employment Term, a base salary (the "Base Salary") payable in equal semi-monthly installments at the annual rate of $280,000.

In addition to the Base Salary, and subject to the sole discretion of the Compensation Committee of the Board of Directors, MWW may receive, as incentive compensation, an annual bonus (the "Incentive Bonus"). The Company shall pay the Incentive Bonus, if any, to MWW only after the issuance of the results of the annual audit of its books and records by its independent auditors.

Expenses; Vacation; Insurance; Other Benefits

MWW shall be entitled to reimbursement for reasonable travel and other out-of-pocket expenses incurred in the performance of his duties hereunder, upon submission and approval of written statements and bills in accordance with the then regular procedures of the Company.

MWW shall be entitled to twenty (20) days paid vacation time per annum or such other period as is in accordance with the regular procedures of the Company governing senior executive officers as determined from time to time by the Company's Board of Directors.

MWW shall be entitled to participate in all employee benefit plans and programs of the Company now or hereafter made available to all senior executives of the Company as a group, to the extent eligible, (including, without limitation, each retirement plan, supplemental and excess retirement plans, annual and long-term incentive compensation plans, stock option and purchase plans, group life insurance, accident and death insurance, medical and dental insurance, sick leave, pension plans, disability plans and fringe benefit plans) on a basis which is no less favorable than is made available to any other senior executive of the Company, except as otherwise provided herein. MWW shall participate in the Company's Executive Retention Program (the "Program") only to the extent the Program provides for the payment of a Loyalty Bonus, an Annual Bonus, if any, and Severance Benefits upon a sale of the Company or the date the participant transfers to a successor company. MWW shall not be entitled to participate in the Program in the event he is terminated involuntarily and such termination is unrelated to the sale of the Company. In the event MWW receives severance under the Program, then such severance shall be in lieu of any severance obligations under this Agreement, except as provided herein.

Representations and Warranties of Employee

. MWW represents and warrants to the Company that (a) as of the Commencement Date, MWW is under no contractual or other obligation which is inconsistent with the execution of this Agreement, the performance of his duties hereunder, or the other rights of the Company hereunder, and (b) MWW is under no physical or mental disability that would hinder his performance of duties under this Agreement.

Non-Competition

MWW agrees that he will not: (i) during the period he is employed by the Company, engage in, or otherwise directly or indirectly be employed by, or act as a consultant to, or be a director, officer, employee, owner, member or partner of, any other business or organization that is or shall then be competing with the Business of the Company (as defined below), and (ii) for a period of one (1) year after he ceases to be employed by the Company, directly or indirectly, compete with or be engaged in the Business of the Company, or be employed by, or act as consultant to, or be a director, officer, employee, owner, member or partner of, any business or organization which, at the time of such cessation, competes with or is engaged in the Business as the Company, except that in each case the provisions of this Section 6 will not be deemed breached merely because MWW: (i) owns not more than five percent (5.0%) of the outstanding common stock of a corporation, if, at the time of its acquisition by MWW, such stock is listed on a national securities exchange, is reported on NASDAQ, or is regularly traded in the over-the-counter market by a member of a national securities exchange; or (ii) MWW is a passive investor in any fund in which he has no investment discretion. This prohibition shall apply to the entire world in recognition of the fact that the Company operates on a multi-national basis. "Business of the Company" shall mean the design, manufacture, sale, re-sale, distribution or maintenance of character generators that are used by the broadcast and cable industries.

It is the intent of the parties to this Agreement that the provisions of this Section 6 shall be enforced to the fullest extent permissible under the laws and public policies applied in each jurisdiction in which enforcement is sought. If any particular provisions or portions of this Section 6 shall be adjudicated to be invalid or unenforceable, such provisions or portion thereof shall be deemed amended to the minimum extent necessary to render such provision or portion valid and enforceable, such amendment to apply only with respect to the operation of such provisions or portions in the particular jurisdiction in which such adjudication is made.

The parties acknowledge that damages and remedies at law for any breach of this Section 6 will be inadequate and that the Company shall be entitled to specific performance and other equitable remedies (including injunction) and such other relief as a court or tribunal may deem appropriate in addition to any other remedies the Company may have. MWW also waives the posting of any bond in connection with the issuance of any injunctive relief.

Patents; Copyrights

. Any interest in patents, patent applications, inventions, copyrights, developments, and processes ("Such Inventions") which MWW now or hereafter during the period he is employed by the Company may own or develop relating to the fields in which the Company may then be engaged shall belong to the Company; and forthwith upon request of the Company, MWW shall execute all such assignments and other documents and take all such other action as the Company may reasonably request in order to vest in the Company all his right, title, and interest in and to Such Inventions, free and clear of all liens, charges and encumbrances. The Company will reimburse MWW for any reasonable fees and expenses (including fees and expenses of counsel) incurred by MWW in connection with executing such assignments and documents and taking any such action at the request of the Company.

Confidential Information

. All confidential information which MWW may now possess or may obtain during the Employment Term relating to the business of the Company shall not be published, disclosed, or made accessible by him to any other person, firm, corporation or entity during the Employment Term or anytime thereafter without the prior written consent of the Company; provided that the foregoing shall not apply to information which is not unique to the Company or which is generally known to the industry or the public, other than as a result of MWW's breach of this covenant, and shall not preclude MWW from disclosing any such information to the extent such disclosure is required by law, disclosure would, in the reasonable judgment of MWW, be in the best interest of the Company or is reasonably necessary in order to defend MWW or to enforce MWW's rights under this Agreement in connection with any action or proceeding to which the Company or its affiliates is a party. MWW shall return all tangibl e evidence of such confidential information to the Company prior to or at the termination of his employment.

Termination

Notwithstanding anything herein contained, if on or after the date hereof and prior to the end of the Employment Term, MWW is terminated "For Cause" (as defined below) then the Company shall have the right to give notice of termination of MWW's services hereunder as of a date to be specified in such notice, and this Agreement shall terminate on the date so specified. Termination "For Cause" shall mean MWW shall: (i) be convicted of a felony crime; (ii) willfully commit any act or willfully omit to take any action in bad faith and to the material detriment of the Company; (iii) commit an act of active and deliberate fraud against the Company; or (iv) materially breach any term of this Agreement and fail to correct such breach within ten (10) days after written notice of the commission thereof. In the event that this Agreement is terminated "For Cause", then MWW shall be entitled to receive only his Base Salary at the rate provided in Section 3 to the dat e on which termination shall take effect.

In the event that MWW shall be physically or mentally incapacitated or disabled or otherwise unable fully to discharge his duties hereunder for a period of ninety (90) consecutive days, then this Agreement shall terminate upon an additional thirty (30) days' written notice to MWW, and no further compensation shall be payable to MWW, except as may otherwise be provided under any disability insurance policy and that pro rata portion of the Base Salary not previously paid through the date of termination.

In the event that MWW shall die, then this Agreement shall terminate on the date of MWW's death, and no further compensation shall be payable to MWW, except as may otherwise be provided under any insurance policy or similar instrument and that pro rata portion of the Base Salary not previously paid through the date of termination.

If MWW's employment is terminated by the Company other than pursuant to subparagraphs 9(a), 9(b) or 9(c) hereof, MWW shall be entitled to receive from the Company: (i) the Base Salary for the period equal to one month following the date of termination; (ii) MWW shall have an exercise period for the options granted pursuant to the 2003 Agreement (the "Options") equal to the remaining term of the Options without regard to any shorter exercise period set forth in the 1999 Stock Option Plan (the "SOP") as a result of termination, and this provision shall be in addition to any severance being received by MWW under the Program; (iii) all benefits to which MWW is entitled under this Agreement for the period equal to one month following the date of termination; (iv) any accrued but unpaid Base Salary and/or Incentive Bonus; and (v) any previously incurred but unpaid business expenses and/or other amounts due under Paragraph 4 of this Agreement. All amounts payable in accord ance with this subsection shall be made in accordance with Company policy as if MWW had not been terminated. The Company shall give written notice of termination to MWW which shall state the date the termination is to be effective.

If the Company does not extend this Agreement, then the Options shall have an exercise period equal to the remaining term of the Options without regard to any shorter exercise period set forth in the SOP.

Nothing contained in this Paragraph 9 shall be deemed to limit any other right the Company may have to terminate MWW's employment hereunder upon any ground permitted by law.

Survival

. The covenants, agreements, representations and warranties contained in or made pursuant to this Agreement shall survive MWW's termination of employment, irrespective of any investigation made by or on behalf of any party.

Modification

. This Agreement sets forth the entire understanding of the parties with respect to the subject matter hereof, supersedes all existing agreements between them concerning such subject matter, and may be modified only by a written instrument duly executed by each party.

Notices

. Any notice or other communication required or permitted to be given hereunder shall be in writing and shall be delivered in person, by telecopier with electronic confirmation of delivery or by delivery to an internationally recognized carrier for overnight delivery to the party to whom it is to be given at the address of such party as set forth in the preamble to this Agreement (or to such other address as the party shall have furnished in writing in accordance with the provisions of this Section 12). In the case of a notice to the Company, a copy of such notice (which copy shall not constitute notice) shall be delivered to Thelen Reid & Priest LLP, 875 Third Avenue, New York, New York 10022, Attn. Robert S. Matlin, Esq. Any notice or other communication given by overnight delivery shall be deemed given at the time of delivery to the carrier, except for a notice changing a party's address which shall be deemed given at the time of receipt thereof. Any notice giv en by telecopier shall be deemed given at the time the notice or other communication is delivered with electronic confirmation of delivery.

Waiver

. Any waiver by either party of a breach of any provision of this Agreement shall not operate as or be construed to be a waiver of any other breach of such provision of this Agreement. The failure of a party to insist upon strict adherence to any term of this Agreement on one or more occasions shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Agreement. Any waiver must be in writing.

Binding Effect

. MWW's rights and obligations under this Agreement shall not be transferable by assignment or otherwise, such rights shall not be subject to encumbrance or the claims of MWW's creditors, and any attempt to do any of the foregoing shall be void. The provisions of this Agreement shall be binding upon and inure to the benefit of MWW and his heirs and personal representatives, and shall be binding upon and inure to the benefit of the Company and its successors and assigns.

Headings

. The headings in this Agreement are solely for the convenience of reference and shall be given no effect in the construction or interpretation of this Agreement.

Counterparts; Governing Law

. This Agreement may be executed in any number of counterparts (and by facsimile), each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. It shall be governed by, and construed in accordance with, the laws of the State of New York, without giving effect to the rules governing the conflicts of laws.

Prior Agreements

. All prior agreements between the Company and MWW with respect to compensation and services are hereby terminated as of the Commencement Date, except that all prior agreements concerning the terms of options previously granted shall remain in full force and effect and shall not be affected by the fact that MWW has become an employee of the Company.

IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date first written above.

CHYRON CORPORATION

By /s/ Wesley W. Lang, Jr.___

Name: Wesley W. Lang, Jr.

Title: Chairman

/s/ Michael Wellesley-Wesley___

Name: Michael Wellesley-Wesley

EX-14 8 ex141.htm Model Code of Ethics for Senior Financial Officers CHYRON CORPORATION

CODE OF ETHICS FOR SENIOR FINANCIAL OFFICERS

Preface

The Senior Financial Officers¹ hold an important and elevated role in corporate governance. As an integral part of the senior management team of Chyron Corporation (the "Company"), Senior Financial Officers are vested with both the responsibility and authority to protect, balance, and preserve the interests of all of the Company's stakeholders, including shareholders, clients, employees, suppliers, and citizens of the communities in which business is conducted. Senior Financial Officers fulfill this responsibility by prescribing and enforcing the policies and procedures employed in the operation of the Company's financial organization, and by demonstrating the following:

I. Honest and Ethical Conduct

Senior Financial Officers will exhibit and promote the highest standards of honest and ethical conduct through the establishment and operation of policies and procedures that:

encourage and reward professional integrity in all aspects of the financial organization, by eliminating inhibitions and barriers to responsible behavior, such as coercion, fear of reprisal, or alienation from the financial organization or the Company itself;

prohibit and eliminate the appearance or occurrence of conflicts between what is in the best interest of the Company and what could result in material personal gain for a member of the financial organization, including Senior Financial Officers;

provide a mechanism for members of the finance organization to inform senior management of deviations in practice from policies and procedures governing honest and ethical behavior; and

demonstrate their personal support for such policies and procedures through periodic communication reinforcing these ethical standards throughout the finance organization.

II. Financial Records and Periodic Reports

Senior Financial Officers will establish and manage the Company's transaction and reporting systems and procedures to ensure that:

_________________

^{1 The Senior Financial Officers of the Company are its principal executive officer, its principal financial officer, its principal accounting officer or controller, and any other persons performing similar functions.

business transactions are properly authorized and completely and accurately recorded on the Company's books and records in accordance with Generally Accepted Accounting Principles (GAAP) and established company financial policy;

the retention or proper disposal of Company records shall be in accordance with established enterprise financial policies and applicable legal and regulatory requirements; and

periodic financial communications and reports will be delivered in a manner that facilitates the highest degree of clarity of content and meaning so that readers and users will quickly and accurately determine their significance and consequence.

III. Compliance with Applicable Laws, Rules and Regulations

Senior Financial Officers will establish and maintain mechanisms to:

educate members of the finance organization about any federal, state or local statute, regulation or administrative procedure that affects the operation of the finance organization and the Company generally;

monitor the compliance of the finance organization with any applicable federal, state or local statute, regulation or administrative rule; and

identify, report and correct in a swift and certain manner, any detected deviations from any applicable federal, state or local statute or regulation.} EX-23 9 ex231.htm Illustrative Consents for SEC Filings (02/01) Consent of Independent Accountants

We hereby consent to the incorporation by reference in this Registration Statement on Form S-8 (No. 333-01861) of Chyron Corporation of our report dated March 4, 2004 relating to the consolidated financial statements and consolidated financial statement schedules, which appears in this Form 10-K.

/s/ PricewaterhouseCoopers LLP

PricewaterhouseCoopers LLP

Melville, New York

March 30, 2004

EX-31.1 10 ex3111.htm Exhibit 31.1

Exhibit 31.1

CERTIFICATION BY
CHIEF EXECUTIVE OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Michael Wellesley-Wesley, Chief Executive Officer, certify that:

1. I have reviewed this annual report on Form 10-K of Chyron Corporation (the "registrant") for the year ended December 31, 2003 (the "report");

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

c) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: March 30, 2004

/s/ Michael Wellesley-Wesley

Michael Wellesley-Wesley

President and

Chief Executive Officer

EX-31.2 11 ex3122.htm Exhibit 31.2

Exhibit 31.2

CERTIFICATION BY
CHIEF FINANCIAL OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Jerry Kieliszak, Chief Financial Officer, certify that:

1. I have reviewed this annual report on Form 10-K of Chyron Corporation (the "registrant") for the year ended December 31, 2003 (the "report");

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: March 30, 2004

/s/ Jerry Kieliszak

Jerry Kieliszak

Senior Vice President and

Chief Financial Officer

EX-32 12 ex321.htm Exhibit 32

Exhibit 32

Chyron Corporation
Certification of
Chief Executive Officer and Chief Financial Officer

(Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350)

This certification is provided pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, and accompanies the annual report on Form 10-K (the "Form 10-K") for the year ended December 31, 2003 of Chyron Corporation (the "Issuer").

We, Michael Wellesley-Wesley, Chief Executive Officer, and Jerry Kieliszak, Chief Financial Officer, of Issuer, each individually, certify that:

(i) the Form 10-K fully complies with the requirements of section 13(a) or section 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a) or 78o(d)); and

(ii) the information contained in the Form 10-K fairly presents, in all material respects, the financial condition and results of operations of the Issuer.

Dated: March 30, 2004

	/s/ Michael Wellesley-Wesley
	Michael Wellesley-Wesley
	President and
	Chief Executive Officer


	/s/ Jerry Kieliszak
	Jerry Kieliszak
	Senior Vice President and
	Chief Financial Officer

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	2003	2002
Gain on extinguishment of debt	$(579)
Writedown of marketable security	211
Gain on sale of equity securities	(63)
Writedown of Trilogy	624
Foreign exchange transaction gain	(44)	$(55)
Other	1	13
	$ 150	$ (42)

	2002	2001

Loss on sale of investments		$ 328
Foreign exchange transaction gain	$ (55)	(93)
Other	13	(24)
	$ (42)	$ 211

	Payments Due by Period
		Less Than	One to	Three to
Contractual Obligations	Total	One Year	Three Years	Five Years

Series A and Series B
Debentures (1)	$ 8,677	$8,677
Other long-term obligations	643	643
Capital lease obligations	19	11	$ 8
Operating lease obligations	2,357	414	1,264	$ 679
Total	$11,696	$9,745	$1,272	$ 679

	Q2	Q3	Q4	Total

Goodwill impairment	$5,478	$3,595	$ 0	$ 9,073
Fixed assets	1,504	0	0	1,504
Severance	749	0	571	1,320
Lease commitments	523	0	0	523
Other	48	0	0	48
	$8,302	$3,595	$571	$12,468
Breakdown:
Non cash charges	$6,982	$3,595	$ 0	$10,577
Cash charges	1,320	0	571	1,891
Remaining cash outlays
at December 31, 2003	0	0	0	0

			Accumulated
	Foreign Currency	Net Unrealized	Other
	Translation	Gain (Loss) on	Comprehensive
	Adjustments	Marketable Securities	Income (Loss)

January 1, 2001	$ (414)	$ (134)	$ (548)
Change for period	(166)	(124)	(290)
December 31, 2001	(580)	(258)	(838)
Change for period	202	37	239
December 31, 2002	(378)	(221)	(599)
Change for period	378	444	822
December 31, 2003	$ 0	$ 223	$ 223

Business Segment Information:
(In thousands)
	Graphics	Streaming Services

Net sales 2001	$18,854	$ 222

Operating loss 2001*	$(10,428)	$(12,750)

Depreciation and
amortization 2001	$2,181	$ 467

Geographic Area Information:
	2003	2002	2001
Revenues from external customers
United States	$17,529	$15,958	$15,419
United Kingdom	608
Canada		1,339	795
Switzerland		1,107
France		979	671
All other	1,232	1,680	2,191
	$19,369	$21,063	$19,076