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Nice quarter for EZEN. A little better than I expected. Not sure why the selloff to $2.28, but happy to get some there.


EZENIA! Inc. Announces 2005 Second Quarter Financial Results
Wednesday August 10, 4:37 pm ET


NASHUA, N.H., Aug. 10 /PRNewswire-FirstCall/ -- Ezenia! Inc. (OTC Bulletin Board: EZEN.OB - News), a leading market provider of secure real-time collaboration solutions for government networks and eGovernment, today reported its financial results for its second quarter and six month period ended June 30, 2005.

The Company generated revenues of approximately $3.3 million for the second quarter of 2005, a 31.6% increase from $2.5 million for the second quarter of 2004. For the six months ended June 30, 2005, revenue was approximately $6.4 million, an increase of 25.5% when compared to the six months ended June 30, 2004.

Income from operations for the quarter ended June 30, 2005 was approximately $885 thousand as compared to $387 thousand for the same period in 2004. For the six-month period ended June 30, 2005, income from operations was approximately $1.5 million, compared to $793 thousand for the same period in 2004.

Net income for the quarter and six-month period ended June 30, 2005 was approximately $929 thousand ($0.06 per share) and $1.6 million ($0.11 per share), respectively. Net income for similar periods ended June 30, 2004 was approximately $1.1 million ($0.08 per share) and $1.5 million ($0.11 per share). Net income for the periods ended June 30, 2004 benefited from a one- time refund of income tax previously withheld by the Israeli Tax Commission of $819 thousand minus a settlement fee of $179 thousand.

"We are pleased to report our seventh consecutive profitable quarter," noted Khoa Nguyen, Ezenia Chairman and Chief Executive Officer. "Income from operations rose 129% and 89%, respectively, for the quarter and six-month periods, year to year, and more than 32% from the first quarter of 2005. Income from operations grew to 27.0% and 24.2% of revenue, respectively, for the quarter and six-month periods of 2005, compared to 15.6% and 15.5% in the same periods of the prior year and 21.3% in the first quarter of the current year. These gratified results have been a combination of the overall improvement of our gross margin, which is expected to continue during the second half of 2005, and our continued focus on expense control."

"For the quarter, total operating expenses remained flat at approximately $1.2 million but declined, as a percentage of revenue, to 38.4% from 49.0% the same period a year ago and from 43.8% for the first quarter of 2005," further commented Mr. Nguyen. For the six months ended June 30, 2005, operating expenses declined to 41.1% from 46.8% for the comparable period in 2004. Our focus on expense control continues to pay off and ensures that investments made in personnel hiring, capital spending, and facility management are consistent with the growth profile of the company and the performance of the InfoWorkSpace product line."

"We ended the quarter with a total cash and net collectible accounts receivable balance of approximately $9.4 million, up 67.9% from the $5.6 million for the same period ending June 30, 2004," remarked Mr. Nguyen. "With continuing improvements in margin and operating expense run rate as a percentage of revenue plus the recent additions to the management team, we are on track to meet or exceed total earning per share achieved last year and strengthen the execution of our long-term strategy."

About Ezenia! Inc.

Ezenia! Inc. (OTC Bulletin Board: EZEN.OB - News), founded in 1991, is a leading provider of real-time collaboration solutions, bringing new and valuable levels of interaction and collaboration to government 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.

Note to Investors

Statements included herein that are not historical facts may be considered forward-looking statements. These include statements relating to: acceptance of the InfoWorkSpace product line; the continued strength in our margin and profit for 2005; our earnings per share for 2005; and the bookings received to date and their relation to the Company's performance for the first quarter of 2005. Such forward-looking statements involve risks and uncertainties that could cause actual operating results to differ from those indicated by such forward-looking statements. These risks and uncertainties include the considerations that are discussed in the Management's Discussion and Analysis section of the Company's 2004 Annual Report on Form 10-K/A for the year ended December 31, 2004, such as the evolution of Ezenia!'s market, its dependence on major customers, rapid technological change and competition within the collaborative software market, its reliance on third party technology, protection of its propriety technology, its history of liquidity concerns and operating losses, and other considerations that are discussed further in this report. Copies of the Company's 2004 Annual Report on Form 10-K/A for the year ended December 31, 2004, or other publicly available financial information, may be received at no charge by contacting Investor Relations at Ezenia!.

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 http:// www.ezenia.com.




EZENIA! INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)

June 30, December 31,
2005 2004
Assets
Current assets
Cash and cash equivalents $8,236 $5,520
Accounts receivable, less allowances of
$351 at June 30, 2005 and $371 at
December 31, 2004 1,171 3,465
Prepaid software licenses 1,870 2,630
Prepaid expenses and other current assets 312 306
Total current assets 11,589 11,921

Equipment and improvements, net of accumulated
depreciation 208 85

Total assets $11,797 $12,006

Liabilities and stockholders' equity
Current liabilities
Accounts payable 64 734
Accrued expenses 293 571
Employee compensation and benefits 160 200
Accrued license costs 19 -
Deferred revenue 5,555 6,663
Total current liabilities 6,091 8,168

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, 15,174,162 issued and
14,513,724 outstanding at June 30,2005;
14,846,598 issued and 14,186,161 outstanding
at December 31,2004 152 148
Capital in excess of par value 63,873 63,643
Accumulated deficit (55,458) (57,092)
Treasury stock at cost, 660,437 shares at
March 31, 2005 and December 31, 2004 (2,861) (2,861)
5,706 3,838
Total liabilities and stockholders' equity $11,797 $12,006



EZENIA! INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except for share and per share related data)
(Unaudited)

Three Months Ended Six Months Ended
June 30, June 30,
2005 2004 2005 2004
Revenues

Product and service
revenue $3,273 $2,486 $6,415 $5,111

Cost of revenues
Cost of product and
service revenue 1,130 880 2,227 1,927

Gross profit 2,143 1,606 4,188 3,184

Operating expenses
Research and development 228 294 514 584
Sales and marketing 332 363 744 627
General and administrative 396 390 935 852
Occupancy and other
facilities related expenses 294 171 429 327
Depreciation 8 1 13 1
Total operating expenses 1,258 1,219 2,635 2,391

Income from operations 885 387 1,553 793


Interest income, net 42 76 71 79
Other income 2 - 10 -
Settlement fees - (179) - 179)
44 (103) 81 (100)

Income before income taxes 929 284 1,634 693
Income tax benefit 819 819
Net income $929 $1,103 $1,634 $1,512

Basic and diluted net
earnings per share:
Basic $0.06 $0.08 $0.11 $0.11
Diluted $0.06 $0.08 $0.11 $0.10



Contact:
Ezenia! Inc.
Investor Relations
[e-mail]




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Source: Ezenia! Inc.