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August 5, 2009

On2 Technologies reports revenue increase in Q2

Operating loss narrows to $1m

By CBR Staff Writer

On2 Technologies, a provider of video compression technologies for desktop, mobile applications and devices, has reported revenue of $5m for the second quarter of 2009 compared to $3.26m in the same quarter of the prior year. For the quarter, the company reported an operating loss of $1.02m compared to $7.17m in the same quarter of the previous year.

For the quarter, net loss was $224,000, or $0 per share, compared to $7.17m, or $0.04 per share, in the second quarter of 2008.

In the second quarter of 2009, On2 added 40 new customers, excluding online sales, with 13 transactions in the quarter that contributed over $50,000 each to revenue.

Royalties of $1.2m in the second quarter increased 74% year-over-year and 5% sequentially. Royalties represented 24% of revenue in the quarter, compared to 21% of revenue in the second quarter of 2008.

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On2 has entered into a definitive agreement to be acquired by Google. The transaction is valued at approximately $106.5m. The transaction, which is subject to On2 stockholder approval, regulatory clearances and other closing conditions, is expected to close in the fourth quarter of 2009.

Matt Frost, chief operating officer and interim chief executive officer of On2 Technologies, said: While we have felt some impact of the global economic recession, the continual growth of video on the Internet coupled with the growing need for content providers to reduce bandwidth and improve quality continues to drive our business forward.

“We were encouraged to see a strong performance from our On2 Finland operation, particularly after it underwent significant cost-reducing measures earlier in the year. We believe, however, that encouraging longer term trends are being established through a combination of revenue growth and effective cost management.

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