Avistar Communications Files 2005 Form 10-K, Addressing SEC Comment on 2004 Financial Statements.

REDWOOD SHORES, Calif. -- Avistar Communications Corporation (NASDAQ:AVSR), a video collaboration platform provider, today announced that it has filed its 2005 Annual Report on Form 10-K, including its financial statements for the fiscal year ended December 31, 2005, with the U.S. Securities & Exchange Commission (SEC). As previously announced, the filing of the 2005 Form 10-K had been delayed due to a review of the Company's 2004 Annual Report on Form 10-K by the SEC, a process that began during the first week of September 2005. Avistar, in conjunction with its independent registered public accountants, has now addressed the SEC's comments regarding the accounting treatment of the proceeds from the November 2004 settlement and cross-licensing agreements with Polycom, Inc. The 2005 Form 10-K reflects a restatement of the presentation of amortization of the Polycom proceeds of $27.5 million gross, $21.1 million net of contingent legal fees, as a new line item in operations labeled "Income from settlement and patent licensing" instead of as "licensing revenue". This adjustment is reflected in the 2005 Form 10-K for the year ended December 31, 2004 and the previously reported quarters of 2005. A Current Report on Form 8-K will also be filed today regarding the revisions to the previously reported financial statements. The restatement did not affect reported net loss, loss per share, stockholders' equity (deficit), or net cash flows from operating, investing or financing activities.

The SEC's guidance to the Company reflected an aversion to representing settlement and cross-licensing proceeds as revenue while there existed the possibility that some component of the proceeds might represent an unearned gain associated with the process of patent litigation. As this was the Company's first licensing agreement with a third party, Avistar and its wholly-owned patent licensing subsidiary, Collaboration Properties, Inc. (CPI), did not have sufficient historical evidence to convince the SEC that the settlement proceeds represented the fair value of the patent licensing aspect of the agreement, a determination required for revenue recognition. The Company intends to "pre-clear" future patent licensing transactions that may involve litigation with the SEC staff, so that a determination can be made as to when sufficient evidence has been established.

It is anticipated that the filing of the Company's 2005 10-K will also resolve the delisting notice that the Company had received from NASDAQ due to the Company's delinquent SEC filing, which was previously announced. That potential delisting from the NASDAQ Capital Market was previously deferred until a review is conducted by the Market's Hearings Panel on May 25, 2006. Avistar intends to request cancellation of the delisting process and hearing in light of the filing of the Company's 2005 Form 10-K.

About Avistar Communications Corporation

Avistar Communications Corporation develops, markets, and supports a video collaboration platform for the enterprise, all powered by the AvistarVOS(TM) software. From the desktop, Avistar delivers business-quality video calling, recording, publishing to web and e-mails, video-on-demand, broadcast origination and distribution, and document sharing. Avistar video-enables business processes by integrating visual communications into the daily workflow and connecting communities of users within and across enterprises. Founded in 1993, Avistar is headquartered in Redwood Shores, California, with sales offices in New York and London. Avistar's technology is used in more than 35 countries.

Collaboration Properties, Inc. (CPI), a wholly owned subsidiary of Avistar, holds a current portfolio of 70 patents for inventions in the primary areas of video and network technology. CPI pursues patents for presence-based interactions, desktop video, recorded and live media at the desktop, multimedia documents, data sharing, and a rich-service network video architecture to support Avistar's product suite and customers. CPI offers licenses to its patent portfolio and Avistar's video-enabling technologies to companies in the video conferencing, rich-media services, public networking, and related industries.

For more information, visit www.avistar.com.

Forward Looking Statements

This press release contains forward-looking statements, including statements regarding future pre-clearance filings with the SEC and the resolution of the delisting notice sent by the NASDAQ Market to Avistar. These statements are based on current expectations and assumptions as of the date of this press release, and involve a number of risks and uncertainties, which may cause actual results to differ significantly from such estimates and assumptions. The risks include, but are not limited to, the risk that Avistar is unsuccessful in obtaining a termination of the delisting of its common stock and possible future changes in Avistar's pre-clearance plans. Other risks are set forth in the section entitled "Risk Factors" in the Company's Annual Report on Form 10-K for the year ended December 31, 2005.

Copyright (C) 2006 Avistar Communications Corporation. All rights reserved. Avistar and the Avistar logo are trademarks or registered trademarks of Avistar Communications Corporation.