Ezenia! Inc. Announces 2009 First Quarter Financial Results

Nashua, N.H., May 7, 2009 – Ezenia! Inc. (OTCBB: EZEN.OB), a leading market provider of real-time collaboration solutions for corporate and government networks, today reported its financial results for the first quarter ended March 31, 2009.

For the first quarter of 2009, the Company generated revenue of approximately $989,000, a 45.4% decrease from approximately $1.8 million for the first quarter of 2008. Loss of intelligence community (IC) and Department of Defense (DOD) revenue, due to redirections in legacy collaborative solution selections, continues to impact our annual subscription revenue in the first quarter. The quarterly loss from operations was approximately ($943,000) or ($0.06) per share, as compared to approximately ($587,000) in quarterly losses from operations, or ($0.04) per share, a year ago. Operating expenses declined to approximately $1.5 million from approximately $1.7 million for 2008, due to reduced headcount and consulting expenses but offset by increased legal and professional charges. Net quarterly loss was approximately ($937,000) or ($0.06) per share, as compared to a net loss of approximately ($553,000), or ($0.04) per share, a year ago.

“The disappointing shortfall in revenue in the first quarter is largely attributed to the booking shortfalls at several of our key accounts that occurred in 2008, due to the DISA sponsored procurement programs of 2006 and 2007”, noted Mr. Khoa Nguyen, Chairman and Chief Executive Officer of Ezenia. “Even with this decline in revenue, we were able to maintain a modest drop in cash of 4.5% to approximately $6.5 million for the quarter ended March 31, 2009 from $6.7 million for the year ended December 31, 2008”. Mr. Nguyen further noted, “the preservation of cash was mostly due to bookings in the quarter that resulted in increased receivables and deferred revenue by approximately 74% and 60%, respectively.”

Mr. Nguyen also stated, “the Company continues to focus on expense control, bringing operating expenses to approximately $1.4 million (including approximately $217,000 in stock based compensation and depreciation expenses) at the end of the first quarter. In addition, the on-going rebuilding and strengthening of our sales organization has not only resulted in increased sales activities in adjacent markets, but we also believe that it has re-energized existing partnerships and is fostering new relationships with strategic resellers and system integrators. Should we be able to sustain this momentum, we believe that future results could improve in the second half of 2009. However, the legacy DISA procurement headwinds and uncertainties from delays in DOD re-bid proposals could adversely impact such outcome. We are striving to return to profitability as expeditiously as possible by developing new business through partnerships while balancing prudent investments against tight expense control.”

EZENIA! INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except for share and per share data)

(Unaudited)

    March 31,
December 31,
    2009 2008
Assets      
Current Assets      
Cash and cash equivalents   $6,471
$6,774
Accounts receivable, less allowances of $28 at March 31, 2009 and at December 31, 2008   1,345 771
Prepaid software licenses   974 1,125
Prepaid expenses and other current assets   175 186
Total current assets   8,965 8,856
       
Deposits   15 15
Equipment and improvements, net   201 243
Total Assets   $9,181 $9,114
       
Liabilities and stockholders’ equity      
Current liabilities      
Accounts payable   $331 $257
Accrued expenses   1,639 1,674
Accrued restructuring   248 287
Employee compensation and benefits   179 150
Deferred revenue   2,118 1,326
Total current liabilities   4,515 3,694
       
Stockholders’ equity      
Preferred stock, $.01 par value, 2,000,000 shares authorized, none issued and outstanding  
Common stock, $.01 par value, 40,000 shares authorized, 15,417,754 issued and 14,658,217 outstanding at March 31, 2009 and at December 31, 2008   154
154
Capital in excess of par value   65,771 65,586
Accumulated deficit   (58,314) (57,375)
Treasury stock at cost, 759,537 shares are March 31, 2009 and December 31, 2008   (2,945) (2,945)
Total stockholders’ equity   4,666 5,420
Total liabilities and stockholders’ equity   $9,181 $9,114
       

EZENIA! INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except for share and per share data)

(Unaudited)

  Three Months Ended
  March 31,
  2009
2008
Revenues    
Product revenue $974 $1,795
Product development revenue 15 16
  989
1,811
     
Cost of revenues    
Cost of product revenue 461 689
Cost of product development revenue 6
  467
689
     
Gross profit (loss) 522 1,122
     
Operating expenses    
Research and development 497 508
Sales and marketing 250 520
General and adminstrative 612 539
Depreciation 42 59
Occupancy and other facilities related expenses 64 83
Total operating expenses 1,465 1,709
     
Loss from operations (943) (587)
     
Interest income, net 15 52
Other income (expense) (9) (18)
  (6) 34
     
Net loss $(937) $(553)
     
Basic and diluted loss per share:    
Basic $(0.06) $(0.04)
Diluted $(0.06) $(0.04)
Weighted average common shares:    
Basic 14,658,217 14,608,696
Diluted 14,658,217 14,608,696

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.

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