Ezenia! Inc. Announces 2008 Second Quarter Financial Results
Nashua, N.H., August 7, 2008- Ezenia! Inc. (OTCBB: EZEN.OB), a leading market provider of real-time collaboration solutions for corporate and government networks, today reported financial results for its second quarter ended June 30, 2008.
Revenue was approximately $1.7 million for the second quarter of 2008 and $3.5 million for the six months ended June 30, 2008, a decrease of 29.9% and 31.1% from the same periods ended June 30, 2007, respectively. The Company believes that the decline in revenue was primarily attributable to delays and reductions of purchases sponsored by the Defense Information System Agency (DISA) to support its Net-Centric Enterprise Services (NCES) programs, which began in 2006 and continue today, and, to a lesser extent, the impact of budgetary constraints within the Department of Defense (DOD).
Operating results yielded losses of approximately $920,000 for the second quarter and $1.5 million for the six months ended June 30, 2008, compared to losses of $446,000 and $579,000 for the same periods in 2007, respectively. Operating costs increased to approximately $2.0 million for the second quarter and $3.7 million for the first half of the year ended June 30, 2008, compared to $1.8 million and $3.4 million for the same periods ended June 30, 2007, respectively. These increases were primarily attributed to an increased number of employees in sales and in increased consulting expenses related to the Company's marketing efforts.
Net losses were approximately $883,000, or ($0.06) per share, for the second quarter and $1.4 million, or ($0.10) per share, for the first half of the year, ended June 30, 2008, as compared to net losses of approximately $266,000, or ($0.02) per share, and $250,000, or ($0.02) per share, for the same periods in 2007, respectively.
The Company believes that there are potential opportunities for recovery and expansion in the existing customer base, in spite of the uncertain environment in the Defense segment, and new growth opportunities in the commercial segment. With a cash balance of approximately $8.9 million at the end of the second quarter 2008, the Company expects to continue to make investments, as needed, in its sales and marketing efforts, continue to enhance its current product, develop new products, and aggressively pursue business opportunities to grow its revenue and return to profitability.
ezenia! Inc.
CONDENSED Consolidated Balance Sheets
(In thousands, except for share and per share related data)
(Unaudited)
June 30,
2008
Dec. 31,
2007
Assets
Cash and cash equivalents
$ 8,851
$ 9,395
Accounts receivable, less allowances of $397 at June 30, 2008 and $413 at December 31, 2007
1,187
2,479
Prepaid software licenses
1,985
1,417
Prepaid expenses and other current assets
199
307
Total current assets
12,222
13,598
Prepaid licenses, net of current portion
-
169
Capitalized software, net
-
18
Equipment and improvements, net
303
380
Total Assets
$12,525
$14,165
Liabilities and stockholders' equity
Current liabilities
Accounts payable
$ 661
$ 497
Accrued expenses
1,689
1,885
Accrued restructuring
135
215
Employee compensation and benefits
286
266
Deferred revenue
3,067
3,512
Total current liabilties
5,838
6,375
Deferred revenue, net of current portion
1
17
Stockholders' equity
Preferred stock, $.01 par value, 2,000,000 shares authorized, none issued and outstanding
-
-
Common stock, $.01 par value, 40,000,000 shares authorized, 15,417,754 issued and 14,658,217 outstanding at June 30, 2008; 15,360,629 issued and 14,601,092 outstanding at December 31, 2007
154
154
Capital in excess of par value
65,220
64,870
Accumulated deficit
(55,743)
(54,306)
Treasury stock at cost, 759,537 shares at June 30, 2008 and December 31, 2007
(2,945)
(2,945)
Total stockholders' equity
6,686
7,773
Total liabilities and stockholders' equity
$12,525
$14,165
ezenia! Inc.
CONDENSED Consolidated Statements of Operations
(In thousands, except for share and per share related data)
(Unaudited)
Three Months Ended
June 30,
Six Months Ended
June 30,
2008
2007
2008
2007
Revenues
Product revenue
$ 1,739
$ 2,158
$ 3,532
$ 4,414
Product development revenue
-
320
16
731
Service revenue
-
1
-
2
1,739
2,479
3,548
5,147
Cost of revenues
Cost of product revenue
676
880
1,364
1,761
Cost of product development revenue
-
243
-
551
Cost of service revenue
-
1
-
2
676
1,124
1,364
2,314
Gross profit
1,063
1,355
2,184
2,833
Operating expenses
Research and development
557
565
1,065
1,093
Sales and marketing
574
452
1,093
856
General and administrative
712
636
1,251
1,167
Depreciation
61
35
120
68
Occupancy and other facilities related expenses
79
113
162
228
Total operating expenses
1,983
1,801
3,691
3,412
Loss from operations
(920)
(446)
(1,507)
(579)
Interest income, net
40
154
91
307
Other income (expense)
(3)
17
(21)
22
37
171
70
329
Loss before income taxes
(883)
(275)
(1,437)
(250)
Income tax benefit
-
9
-
-
Net Loss
$ (883)
$ (266)
$ (1,437)
$ (250)
Basic and diluted loss per share:
Basic
$ (0.06)
$ (0.02)
$ (0.10)
$ (0.02)
Diluted
$ (0.06)
$ (0.02)
$ (0.10)
$ (0.02)
Weigted average common shares:
Basic
14,608,696
14,686,234
14,553,189
14,669,950
Diluted
14,608,696
14,686,234
14,553,189
14,669,950
About Ezenia! Inc.
Ezenia! Inc. (OTC Bulletin Board: EZEN.OB), founded in 1991, is a leading provider of real-time collaboration solutions, bringing new and valuable levels of interaction and collaboration to corporate networks and the Internet. By integrating voice, video and data collaboration, the Company's award-winning products enable groups to interact through a natural meeting experience regardless of geographic distance. Ezenia! products allow dispersed groups to work together in real-time using powerful capabilities such as instant messaging, white boarding, screen sharing and text chat. The ability to discuss projects, share information and modify documents allows users to significantly improve team communication and accelerate the decision-making process. More information about Ezenia! Inc. and its product offerings can be found at the company's Web site,
www.Ezenia.com.
Note to Investors Regarding Forward-Looking Statements
Statements included herein that are not historical facts may be considered forward-looking statements. You can identify these forward-looking statements by use of the words “expects,” “anticipates,” “estimates,” “believes,” “projects,” “intends,” “plans,” “will,” “may,” and similar words. Such forward-looking statements, including statements regarding our business and financial outlook, long-term strategy, improvements in our infrastructure, and proposed earnings per share growth targets, involve risks and uncertainties that could cause actual operating results to differ materially from those indicated by such forward-looking statements. These risks and uncertainties include the considerations that are discussed in the Company's 2007 Annual Report on Form 10-K as amended for the year ended December 31, 2007, such as its dependence on the United States government as its largest customer, adverse changes in available funding and discretionary spending within the Department of Defense, its dependence on other major customers, the evolution of Ezenia!'s market, rapid technological change and competition within the collaborative software market, its reliance on third-party technology, protection of its propriety technology, acceptance of IWS in the commercial market, retention of key employees, stock price volatility, customer acceptance of Version 3.0 of InfoWorkSpace, its history of liquidity concerns and operating losses, and other considerations that are discussed further in such report. You should not place undue reliance upon any such forward-looking statements, which speak only as of the date made. The Company disclaims any obligation to update forward-looking statements after the date of such statements.
Note:
Ezenia! is a registered trademark of Ezenia! Inc., and the Ezenia! Logo and InfoWorkSpace are trademarks of Ezenia! Inc. Additional information on Ezenia! and its products is available at our website
http://www.ezenia.com.