ZILA REPORTS FISCAL 2009 3RD QTR NET REVENUES OF $8.5 MIL.(Financial report)

Zila, Inc. (Nasdaq:ZILA), Scottsdale, Ariz., has reported financial results for its fiscal 2009 third quarter ended April 30, 2009. "During the third quarter, revenues remained steady, and our cash position increased compared with the previous quarter," said David Bethune, chairman and chief executive officer of Zila. "Moreover, as a result of continued cost cutting throughout the organization, we narrowed our loss from operations to approximately $328,000 from approximately $1.1 million last quarter, excluding a $23.2 million non-cash impairment charge recognized last quarter." The company has stated that in order to continue as an on-going business and avoid bankruptcy, it will require additional funds to restructure or retire its Senior Secured Convertible Notes due in July 2010, and to grow its business. Efforts to seek additional funding have included discussions with several potential financial and strategic investors, as well as with the holders of the

Senior Secured Convertible Notes.

Fiscal 2009 Third Quarter Financial Results

-- Net revenues were $8.5 million, compared with $11.2 million for the third quarter of fiscal 2008. Sales of ViziLite Plus were $2.7 million, compared with $3.6 million for the third quarter of fiscal 2008. The company attributed the decline in revenues primarily to the global economic downturn and customer concern about the company's viability as an ongoing business.

-- Gross profit was $5.0 million, or 59% of net revenues, compared with $6.8 million, or 61% of net revenues, in the third quarter of fiscal 2008.

-- Marketing and selling expense decreased 48% to $3.2 million from $6.0 million in the third quarter of fiscal 2008. The decrease reflects a lower level of commissions and bonuses for the sales force on reduced sales levels, reduced sales force headcount and reductions in expenditures in non-direct selling related expenses. Because of the company's financial condition, there have been limited funds to spend for marketing programs to supplement the efforts of the direct sales force.

-- General and administrative expense decreased 46% to $1.8 million from $3.3 million for the third quarter of fiscal 2008, primarily due to headcount and salary reductions, as well as the reduction, deferral or elimination of certain employee benefits and non-critical programs across the organization.