O Video

"To grow both voice and video, we are expanding sales and increasing advertising. The $2.0 million in gross proceeds from our increase in debt announced today meets our existing plan's funding requirements for the year. If appropriate, we may choose to accelerate certain programs; however, our commitment to profitable growth remains steadfast. We now have the right video team in place to improve distribution, which we believe will have a meaningful impact beginning in 2009," concluded Johnson.

Financial Highlights for the Second Quarter of 2008 Compared to the First Quarter of 2008

    --  Revenue was $8.0 million, up from $7.7 million.
        o  Video revenue was $1.6 million, up from $1.4 million.
        o  Voice and network revenue was $6.4 million, up from $6.3 million.
    --  Gross profit was $3.7 million, or 46.8% of revenue, compared to $3.4
        million, or 44.9% of revenue.
        o  Voice and network services gross margin was 53.4%, compared to
           52.4%.
        o  Video gross margin improved to 20.8%, compared to 9.9%, reflecting
           a more normalized mix of video software and installation revenue
           and better managed installation process.
    --  Total operating expense was $8.5 million including non-recurring $1.8
        million in severance costs, compared to $6.6 million.
    --  Net income was $4.4 million, or $0.15 per diluted share, compared to a
        net loss of $6.6 million, or $0.39 per share in first quarter 2008.
        Second quarter 2008 Adjusted EBITDA was a loss of $1.3 million,
        compared to a loss of $1.6 million last quarter.  The improvement in
        EBITDA reflects improved gross margins and the initial impact of cost
        cutting programs.
    --  At June 30, 2008, the cash and cash equivalents balance was $1.1
        million. On August 14, the company announced it received $2.0 million
        in proceeds for increasing its six-year, interest only, non-amortizing
        debentures to an aggregate principal amount of $28.1 million, up from
        the $26.1 million principal announced on July 1st.

Management believes certain non-GAAP measures provide relevant and meaningful measures by which investors can evaluate the business. EBITDA is defined as earnings or loss before interest, income taxes, depreciation and amortization, and the company defines Adjusted EBITDA as EBITDA adjusted for non-cash items including stock-based and warrant compensation, charges related to changes in fair market value of warrant and beneficial conversion feature liabilities. A reconciliation can be found at the end of this release.

    Recent Corporate Highlights
    --  Hired J.D. Vaughn as Vice President of Worldwide Telepresence Sales,
        who has grown video businesses while at Polycom and Accord Networks.
    --  Launched a digital phone service with Costco Wholesale(R) to offer a
        combined business phone service and business phone system package to
        Costco's Membership, targeted at members running small businesses with
        twenty-five or fewer employees. This segment represents over 60% of
        all registered businesses in the U.S.
    --  Restructured outstanding convertible debentures aggregating $10.8
        million and all shares of its outstanding Series A Preferred Stock
        with a stated value of $15.3 million with six-year, interest only,
        non-amortizing debentures in an aggregate principal amount of $26.1
        million, which was increased to $28.1 million in August 2008.
    --  Exhibited over multiple panels at InfoComm 2008.
    --  Entered into an agreement with AMD to jointly develop telepresence
        focused Stream Computing technology and announced the first results of
        this ongoing joint technology effort.
    --  Released Digital Presence technology platform version 3.4.3.
    --  Expanded its voice channel program and market reach through an
        agreement with OneCall, a Boston-based unified communications
        solutions provider focused on the Real Estate and Financial Services
        markets.
    --  Hired Salzwedel Financial Communications to conduct ongoing outreach
        with the investment community.

Conference Call Information

Management will conduct a conference call at 10:00 am PT/1:00 pm ET on August 14, 2008 to discuss the company's second quarter 2008 results. To access the call in the United States, dial 888-713-4199; to dial-in internationally, dial 617-213-4861 and enter passcode 27301419. The call will also be broadcast live over the Internet and will be available for replay for 90 days at http://www.telanetix.com. A telephone replay will be available two hours after the call through August 16, 2008 by dialing 888-286-8010 for domestic callers and 617-801-6888 for international callers. All parties will need the following replay pass code 61894960.

About Telanetix, Inc.

Telanetix is a leading IP solutions provider offering telepresence and advanced communication services to the SMB and SME markets. By leveraging on ubiquitous network infrastructures, Telanetix's solutions meet the real-world communications demands of its customers. The company's core technologies include a Telepresence offering, called Digital Presence(TM), designed to create fully immersive and interactive meeting environments that incorporate voice, video and data from multiple locations into a single environment; and IP enabled enhanced services that give companies flexible calling solutions at a fraction of the price of traditional telecom providers. Additional information can be found at the Telanetix corporate website, http://www.telanetix.com.

Safe Harbor Statement

Certain statements contained in this press release are "forward-looking statements" within the meaning of applicable federal securities laws, including, without limitation, anything relating or referring to future financial results and plans for future business development activities, and are thus prospective. Forward-looking statements are inherently subject to risks and uncertainties some of which cannot be predicted or quantified based on current expectations. Such risks and uncertainties include, without limitation, the risks and uncertainties set forth from time to time in reports filed by the company with the Securities and Exchange Commission. Although the company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. Consequently, future events and actual results could differ materially from those set forth in, contemplated by, or underlying the forward-looking statements contained herein. The companies undertake no obligation to publicly release statements made to reflect events or circumstances after the date hereof.

                               TELANETIX, INC.
                    Condensed Consolidated Balance Sheets

                                               June 30, 2008 December 31, 2007
                                                 (Unaudited)
    ASSETS
    Current assets
      Cash                                        $1,096,225     $3,779,821
      Accounts receivable, net                     2,831,633      2,406,885
      Inventory                                      313,368        230,590
      Prepaid expenses and other current assets      665,278        455,577
        Total current assets                       4,906,504      6,872,873
      Property and equipment, net                  5,728,841      5,844,421
      Goodwill                                     7,509,469      6,934,304
      Purchased intangibles, net                  19,783,335     20,953,333
      Other assets                                 1,042,338        738,024
        Total assets                             $38,970,487    $41,342,955
    LIABILITIES AND STOCKHOLDERS' EQUITY
    Current liabilities
      Accounts payable                            $3,291,779     $1,897,165
      Accrued liabilities                          2,706,061      2,618,305
      Line of credit                                       -        503,590
      Deferred revenue                               847,555      1,018,515
      Deferred compensation, current portion         195,319        445,389
      Current portion of capital lease obligations   997,545      1,200,989
      Convertible debentures, current portion              -      3,670,734
      Warrant and beneficial conversion feature
       liabilities                                 6,249,283      9,103,923
        Total current liabilities                 14,287,542     20,458,610
    Non-current liabilities
      Capital lease obligations, net of
       current portion                             1,233,145      1,433,694
      Deferred revenue                               139,378         69,700
      Convertible debentures, less current
       portion                                    17,394,973      1,003,178
        Total non-current liabilities             18,767,496      2,506,572
        Total liabilities                         33,055,038     22,965,182
    Stockholders' equity
      Preferred stock, $.0001; Authorized:
       10,000,000; Issued and outstanding:
       None at June 30, 2008 and 13,000 at
       December 31, 2007                                   -              1
      Common stock, $.0001 par value;
       Authorized: 200,000,000 shares; Issued
       and outstanding: 26,407,383 at June 30,
       2008 and 23,079,576 at December 31, 2007        2,641          2,308
      Additional paid in capital                  30,681,127     39,011,923
      Warrants                                        10,000         10,000
      Accumulated deficit                        (24,778,319)   (20,646,459)
        Total stockholders' equity                 5,915,449     18,377,773
        Total liabilities and stockholders'
         equity                                  $38,970,487    $41,342,955



                               TELANETIX, INC.
               Condensed Consolidated Statements of Operations
                                 (Unaudited)

                        Three months ended June 30, Six months ended June 30,
                             2008         2007         2008          2007
                                       (Restated)                 (Restated)
    Revenues
    Product revenues      $1,554,463   $1,996,023    $2,806,718   $2,413,749
    Service revenues       6,444,072       49,050    12,848,578       93,592
      Total revenues       7,998,535    2,045,073    15,655,296    2,507,341

    Cost of revenues
    Cost of product
     revenues              1,245,696    1,916,349     2,384,657    2,018,400
    Cost of service
     revenues              3,006,204       48,844     6,089,229       88,498
      Total cost of
       revenues            4,251,900    1,965,193     8,473,886    2,106,898
      Gross profit         3,746,635       79,880     7,181,410      400,443

    Operating expenses
      Selling, general
       and
       administrative      5,973,945      936,435    10,504,968    2,200,444
      Research,
       development and
       engineering         1,775,270      208,196     3,044,207      388,903
      Depreciation           211,778       19,770       405,197       32,744
      Amortization of
       purchased
       intangibles           584,998        4,000     1,169,998        4,000
        Total operating
         expenses          8,545,991    1,168,401    15,124,370    2,626,091
          Operating
           loss           (4,799,356)  (1,088,521)   (7,942,960)  (2,225,648)

    Other income (expense)
      Interest income          9,253       15,104        16,793       22,644
      Interest expense    (1,722,850)  (1,023,071)   (2,988,445)  (1,527,051)
      Change in fair
       market value of
       derivative
       liabilities        10,941,244      711,412     8,732,752   (3,210,784)
      Gain on disposal
       of fixed assets             -        4,339             -        4,339
        Total other
         income
         (expense)         9,227,647     (292,216)    5,761,100   (4,710,852)
    Net income (loss)      4,428,291   (1,380,737)   (2,181,860)  (6,936,500)
      Series A preferred
       stock dividends,
       accretion and
       increase in
       stated value         (623,761)           -    (3,178,003)           -
    Net income (loss)
     applicable to
     common
     stockholders         $3,804,530  $(1,380,737)  $(5,359,863) $(6,936,500)

    Net income (loss)
     per share - basic         $0.15       $(0.09)       $(0.22)      $(0.44)

    Net income (loss)
     per share - diluted       $0.15       $(0.09)       $(0.22)      $(0.44)

    Weighted average
     shares
     outstanding -
     basic                24,667,717   16,203,012    23,950,820   15,887,917

    Weighted average
     shares
     outstanding -
     diluted              25,488,770   16,203,012    23,950,820   15,887,917



                               TELANETIX, INC.
                   Supplemental Table of Revenue Breakdown

                         Three months ended June 30,

                  Video Solutions   Voice and Network Solutions       Total
    2008
    Revenues         $1,607,797              $6,390,738            $7,998,535

    2007
    Revenues         $2,045,073                      $-            $2,045,073


                          Six months ended June 30,

                  Video Solutions   Voice and Network Solutions       Total
    2008
    Revenues        $2,971,732               $12,683,564          $15,655,296

    2007
    Revenues        $2,507,341                        $-           $2,507,341



                               TELANETIX, INC.
         Reconciliation from Net Income to EBITDA and Adjusted EBITDA

                                                      Three months ended
                                                 June 30, 2008  March 31, 2008
    Net Income (loss)                              $4,428,291    $(6,610,151)
      Depreciation and amortization of
       purchased intangibles                        1,038,053      1,011,824
      Interest expense                              1,722,850      1,265,595
    EBITDA                                          7,189,194     (4,332,732)
      Adjustments for certain non-cash expenses:
      Change in fair market value of warrant and
       beneficial conversion feature liabilities  (10,941,244)     2,208,492
      Stock and warrant compensation (1)            2,418,342        442,393
    Adjusted EBITDA                               $(1,333,708)   $(1,681,847)

    (1) Stock-based and warrant compensation for the period ended June 30,
        2008 included $1.8 million in severance costs, including accelerated
        vesting and modifications to options.

SOURCE Telanetix, Inc.

http://www.telanetix.com