Ezenia! Inc. Announces 2006 Third Quarter Financial Results

Nashua, N.H. (November 2, 2006) – Ezenia! Inc. (OTCBB:EZEN.OB), a leading market provider of real-time collaboration solutions for corporate and government networks and eBusiness, today reported financial results for its third quarter and nine month period ended September 30, 2006.

The Company generated revenues of approximately $2.9 million for the third quarter of 2006, an 11.7% decrease from approximately $3.3 million for the third quarter of 2005. For the nine months ended September 30, 2006, revenue was approximately $10.1 million, an increase of 4.4% when compared to the nine months ended September 30, 2005.

Income from operations for the quarter ended September 30, 2006 was approximately $398 thousand as compared to approximately $986 thousand, for the same period of 2005. For the nine-month period ended September 30, 2006, income from operations was approximately $2.4 million, compared to approximately $2.5 million for the same period of 2005.

Net income for the quarter ended September 30, 2006 was approximately $394 thousand, or $0.03 per share, as compared to net income of approximately $1.0 million, or $0.07 per share, for the same period of 2005. For the nine-month period ended September 30, 2006, net income was approximately $2.7 million, or $0.19 per share, as compared to approximately $2.7 million, or $0.18 per share, for the same period of 2005.

GAAP net income for the third quarter of fiscal 2006 includes approximately $159 thousand of income tax expense ($0.01 per share) and approximately $138 thousand of equity-based compensation expense ($0.01 per share) relating to the Company’s implementation of Statement of Financial Accounting Standards (SFAS) 123R “Share Based Payments” in the first quarter of the current year. There was no income tax or equity-based compensation expense for the period ended September 30, 2005.

Net working capital increased approximately 62.0% to approximately $10.6 million for the period ended September 30, 2006 from approximately $6.5 million for the period ended September 30, 2005. For the nine-month period ended September 30, 2006, total cash and net collectible accounts receivable balance was approximately $13.2 million, an increase of approximately $1.9 million or 16.5%, from the period ended September 30, 2005.

“In spite of the budgetary constraints within the Department of Defense (“DoD”) during the final quarter of the government’s fiscal year end, we were able to record our twelfth consecutive quarter of profitability. The decline in revenue for the third quarter of 2006 can be attributed primarily to these budgetary constraints as we saw delays of IWS development contracts and discretionary service-related purchases” noted Khoa Nguyen, Ezenia Chairman and Chief Executive Officer. “Nevertheless, we were pleased to receive, very late in the quarter, a $1 million award for Phase 2 of our Small Business Innovative Research (“SBIR”) contract with the Air Force Research Laboratory (“AFRL”). As the prime contractor of the project, a first-time occurrence for the Company, we will work closely with the AFRL and our partners to ensure success and create a Rapid Prototype Solution for the Collaboration Gateway Project.”

“Moreover, we continued to make steady improvements to our infrastructure by adding resources to our engineering and sales teams,” further remarked Mr. Nguyen. “The first benefits of our engineering investment have materialized with the introduction of two new exciting and dynamic enhancements to our award-winning InfoWorkSpace product, EZinFORM and EZinCMD, which have applicability to military and civilian environments. EZinFORM allows agents in the field or employees in remote offices to record and register critical information, inform their superiors at headquarters, share information across agencies or departments, make recommendations on actions to be taken, and have the IWS system automatically keeping track of such activities either for auditing or reviewing purposes. EZinCMD derived by real-life, actual needs from battlefield experience provides a commanding officer or executive leader total command to react effectively and decisively to mission-critical or emergency situations, by giving him or her the capability and flexibility to instantaneously assemble necessary units or teams on demand, accelerate immediate dissipation of sensitive information, leverage the total expertise and experience of all participants, and mobilize the entire team to bring to bear their combined efforts. By focusing on true customer needs for military and civilian applications and continuing deliberate investments to improve and expand our product line and sales infrastructure, we believe that we will ultimately achieve our goal of aggressive top line and bottom line growth.”


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 2005 Annual Report on Form 10-K as amended for the year ended December 31, 2005, 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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