At midsemester, we have finished the video encoder that works with our video decoder of H.261. We were able to display images to the screen. We have finished part of the entropy codec, although some bugs exists and more verification and standardization is necessary. Here is a list of the bugs we need to fix: 1). When displaying the decoded image after being placed through the entropy codec there are noise of some sort at the top edges of the image. 2). Segmentation fault occurs when the program tried to decode MC from entropy codec Besides fixing the bugs, at this point, we also need to: 1) Make sure we can transmit data according to the strict standards of H.261 2) Create a GUI to make encoding, decoding, and displaying easier for the user. 3) Add optimizations (different quantization stepsizes,sub-optimal motion estimation, etc.) 4) If there is time, allow the encoder/decoder to take data from a video camera and send it to a computer screen via a bit-stream in real-time. A link to our work can be found in: http://www.contrib.andrew.cmu.edu/~bre/796