Operating results yielded losses of approximately $1.0 million for the second quarter and $1.9 million for the six months ended June 30, 2009, compared to losses of $920,000 and $1.5 million for the same periods in 2008, respectively. Operating costs declined to approximately $1.5 million for the second quarter and $3.0 million for the first half of the year ended June 30, 2009, compared to $2.0 million and $3.7 million for the same periods ended June 30, 2008, respectively. The decline in spending, virtually across the board, was attributed to reductions in employee related compensation costs, consulting expenses, supplies, occupancy and depreciation.

"The disappointing shortfall in revenue this quarter and for the first half of the year is directly attributed to the booking shortfalls from key accounts and procurement difficulties that we continue to face, due to the previously established DISA sponsored selection programs," noted Mr. Khoa Nguyen, Chairman and Chief Executive Officer of Ezenia!. "Even with this decline in revenue and lack of income, we were able to preserve cash to approximately $6.4 million for the six months ended June 30, 2009 from $6.7 million for the year ended December 31, 2008, a drop of less than 5%." Mr. Nguyen further noted, "The preservation of cash was mostly due to the collection of receivable balances and continued efforts to reduce expenses. The Company continues to focus on containing operating expense control, seek new sales opportunities both in traditional markets and adjacent markets, and foster new relationships with strategic resellers and system integrators. More recently, we have set up a Board of Advisors with distinguished members to help the Company in this endeavor. We are striving to preserve cash and return to profitability as expeditiously as possible, while balancing prudent investments against tight expense control."

Ezenia! Inc. (OTCBB: EZEN), 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 eGovernment. 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 and service offerings can be found at the Company's Web site, http://www.ezenia.com.

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, which include statements regarding the Company's business and financial outlook, expense control and cash preservation efforts, pursuit of sales opportunities and resulting effects, and long-term strategy, involve risks and uncertainties that could cause actual 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 Annual Report on Form 10-K for the year ended December 31, 2008, such as the evolution of Ezenia!'s market, dependence on the United States government as its largest customer and on other major customers, continued funding of defense programs by the United States government and the timing of such funding, uncertainties associated with procurement processes and on-going bidding activities for government programs, rapid technological change and competition within the collaborative software market, the Company's reliance on third-party technology, protection of its propriety technology, customer acceptance of IWS and other new products including the acceptance of IWS in the commercial market, retention of key employees, stock price volatility, the Company's 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.

EZENIA! INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except for share and per share related data) (Unaudited) June 30, December 31, 2009 2008 ------------ ------------ Assets Current assets Cash and cash equivalents $ 6,434 $ 6,774 Accounts receivable, less allowances of $28 at June 30, 2009 and at December 31, 2008 341 771 Prepaid software licenses 910 1,125 Prepaid expenses and other current assets 160 186 ------------ ------------ Total current assets 7,845 8,856 ------------ ------------ Deposits 15 15 Equipment and improvements, net 159 243 ------------ ------------ Total assets $ 8,019 $ 9,114 ============ ============ Liabilities and stockholders' equity Current liabilities Accounts payable $ 271 $ 257 Accrued expenses 1,669 1,674 Accrued restructuring 215 287 Accrued employee compensation and benefits 215 150 Deferred revenue 1,760 1,326 ------------ ------------ Total current liabilities 4,130 3,694 ------------ ------------ Stockholders’ equity Preferred stock, $.01 par value, 2,000,000 shares authorized, none issued and outstanding - - Common stock, $.01 par value, 40,000,000 shares authorized, 15,417,754 issued and 14,658,217 outstanding at June 30, 2009 and at December 31, 2008 154 154 Capital in excess of par value 65,957 65,586 Accumulated deficit (59,277) (57,375) Treasury stock at cost, 759,537 shares at June 30, 2009 and December 31, 2008 (2,945) (2,945) ------------ ------------ Total stockholders’ equity 3,889 5,420 ------------ ------------ Total liabilities and stockholders’ equity $ 8,019 $ 9,114 ============ ============ EZENIA! INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except for share and per share related data) (Unaudited) Three Months Ended Six Months Ended June 30, June 30, ---------------------- ---------------------- 2009 2008 2009 2008 ---------- ---------- ---------- ---------- Revenues Product revenue $ 888 $ 1,739 $ 1,862 $ 3,532 Product development revenue 19 - 34 16 ---------- ---------- ---------- ---------- 907 1,739 1,896 3,548 ---------- ---------- ---------- ---------- Cost of revenues Cost of product revenue 391 676 851 1,364 Cost of product development revenue 8 - 14 - ---------- ---------- ---------- ---------- 399 676 865 1,364 ---------- ---------- ---------- ---------- Gross profit 508 1,063 1,031 2,184 ---------- ---------- ---------- ---------- Operating expenses Research and development 462 557 960 1,065 Sales and marketing 284 574 534 1,093 General and administrative 654 712 1,266 1,251 Depreciation 43 61 85 120 Occupancy and other facilities-related expenses 67 79 132 162 ---------- ---------- ---------- ---------- Total operating expenses 1,510 1,983 2,977 3,691 ---------- ---------- ---------- ---------- Loss from operations (1,002) (920) (1,946) (1,507) Interest income 14 40 30 91 Other expense 24 (3) 14 (21) ---------- ---------- ---------- ---------- 38 37 44 70 ---------- ---------- ---------- ---------- Net loss $ (964) $ (883) $ (1,902) $ (1,437) ========== ========== ========== ========== Basic and diluted loss per share: Basic $ (0.07) $ (0.06) $ (0.13) $ (0.10) Diluted $ (0.07) $ (0.06) $ (0.13) $ (0.10) Weighted average common shares: Basic 14,658,217 14,608,696 14,658,217 14,553,189 Diluted 14,658,217 14,608,696 14,658,217 14,553,189