IPIX Reports Results 2005

Revenue almost doubled in the fourth quarter ended December 31,2005 to $1.8 million from $0.9 million in the comparable quarter theprior year. Net loss to common shareholders in the fourth quarter was($5.1) million or ($0.18) a share compared to ($4.8) million or($0.22) a share in the comparable quarter the prior year. In 2004, netloss to common shareholders included loss from discontinued operationsof ($1.0) million or ($0.04) a share.

Annual revenue for 2005 was $5.4 million, a forty percent increasefrom the previous year. Net loss to common shareholders year for theended December 31, 2005 was ($22.5) million or ($0.91) per sharecompared to a net loss of ($15.6) million or ($0.95) per share in thecomparable period the prior year. In 2005 and 2004, net loss to commonshareholders included loss from discontinued operations of ($1.4)million or ($0.06) a share and ($4.9) million or ($0.30) a sharerespectively.

IPIX demonstrated increased traction in its vertical markets.Video sales for the year 2005 increased 47% over 2004. In addition,professional service revenue continued to increase in the fourthquarter under IPIX's $2.4 million research contract with theDepartment of Defense Advanced Research Projects Agency (DARPA) toresearch and build the world's highest resolution video camera.

Restructuring expenses include personnel, rent, IT infrastructurerelocation, and fixed asset valuation, which were associated with thecompany's continuing commitment to streamline operations andconsolidate resources. Additionally, the company incurred significantlegal expense in 2005 for patent litigation and for accounting andprofessional fees related to the second year of Sarbanes Oxleyreporting requirements.

"The result for 2005 clearly demonstrates the growing demand forvisual solutions for business intelligence," said IPIX President andCEO Clara Conti. "During 2005 the company undertook many measures tohelp us conserve cash resources, minimize operational redundancies andalign internal resources to take full advantage of the growing demandfor immersive technology solutions. While I am disappointed in thefinancial results for 2005, I am very pleased with the progress wehave made this past year toward establishing IPIX as a premiersupplier of I.P. camera technology in several significant verticalmarkets."

About IPIX

IPIX Corporation is the leading developer of advanced, 360 degreevisual technologies for government and commercial applications. Wecombine experience, patented technology and strategic partnerships todeliver visual business intelligence solutions worldwide. www.ipix.com

This press release may contain forward-looking information withinthe meaning of Section 27A of the Securities Act of 1933 and Section21E of the Securities Exchange Act of 1934, and is subject to the safeharbors under those sections. In some cases, you can identifyforward-looking statements by terminology such as "expect," "believe,""may," "will," "plans" and "anticipate," or the negative of such termsor comparable terminology. Forward-looking statements appearing hereininclude statements concerning operating and profitability plans andgoals and restructuring efforts and are based on current expectations.

Actual results may differ materially from those projected in theforward-looking statements based upon a number of factors including:changes in the demand for our products and services; our third-partysupplier's ability to deliver high quality components to us in atimely fashion; our ability to control or effect reductions in costs;uncertainty regarding our ability to continue as a going concern; ourability to raise capital and fund our operations; our ability toattract and retain highly qualified personnel; our ability to design,manufacture and deliver high quality products in a timely fashion;and, the burdens and costs of defending against potential infringementclaims.

The matters discussed in this press release also involve risks anduncertainties described from time to time in documents filed with theSecurities and Exchange Commission, including but not limited to Forms10-K, Forms 10-K/A, Forms 10-Q, Forms S-3 and Forms 8-K (www.sec.gov).
IPIX Corporation
Condensed Consolidated Statements of Operations

Three months ended Twelve months ended
December 31, December 31,
----------------------- -----------------------
2005 2004 2005 2004
----------- ----------- ----------- -----------
(unaudited) (unaudited) (unaudited) (audited)

(In thousands, except
per share data)

REVENUES:
Hardware $ 648 $ 585 $ 2,523 $ 2,476
Services 805 22 1,728 189
Licenses & Other 347 302 1,148 1,199
---------- ---------- ---------- ----------
Total revenue 1,800 909 5,399 3,864
---------- ---------- ---------- ----------

COST OF REVENUES:

Hardware 654 788 2,172 2,320
Services 688 11 1,382 108
Licenses & Other 8 17 31 98
---------- ---------- ---------- ----------
Total cost of
revenue 1,350 816 3,585 2,526
---------- ---------- ---------- ----------

Gross profit 450 93 1,814 1,338
---------- ---------- ---------- ----------

OPERATING EXPENSES:
Sales and marketing 1,532 1,212 7,125 4,305
Research and
development 603 567 2,493 2,065
General and
administrative 2,811 1,652 10,125 4,490
Restructuring and
impairment 612 170 3,053 170
---------- ---------- ---------- ----------
Total operating
expenses 5,558 3,601 22,796 11,030
---------- ---------- ---------- ----------

Loss from operations (5,108) (3,508) (20,982) (9,692)
Interest income
(expense) and other 145 (170) 322 (118)
---------- ---------- ---------- ----------

Loss from continuing
operations (4,963) (3,678) (20,660) (9,810)
Loss from discontinued
operations, net of
taxes -- (1,023) (1,360) (4,925)
---------- ---------- ---------- ----------

Net loss (4,963) (4,701) (22,020) (14,735)
Preferred stock
dividends (108) (117) (439) (874)
---------- ---------- ---------- ----------

Net loss available to
common stockholders $ (5,071) $ (4,818) $ (22,459) $ (15,609)
========== ========== ========== ==========

Basic and diluted loss
per share:
Continuing
operations $ (0.18) $ (0.18) $ (0.85) $ (0.65)
Discontinued
operations -- (0.04) (0.06) (0.30)
---------- ---------- ---------- ----------
Net loss per common
share available to
common stockholders-
basic and diluted $ (0.18) $ (0.22) $ (0.91) $ (0.95)
========== ========== ========== ==========

Weighted average common
shares - Basic and
diluted 27,431 21,460 24,799 16,470



IPIX Corporation
Condensed Consolidated Balance Sheets

December 31, December 31,
2005 (1) 2004 (2)
-------------- ---------------
(000s)
ASSETS
Current assets:
Cash, cash equivalents, and short
term investments $6,340 $14,229
Accounts receivable 1,348 414
Inventory, net of reserves of $214
and $346 2,145 2,334
Prepaid and other current assets 1,159 1,512
Assets held for sale, net 28 321
-------------- ---------------
Total current assets 11,020 18,810

Computer hardware, software and other,
net 1,191 716
Restricted cash and other long-term
assets 80 718
-------------- ---------------
Total assets $12,291 $20,244
============== ===============


LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued
liabilities $2,543 $1,043
Accrued liabilities 3,350 3,844
-------------- ---------------
Total current liabilities 5,893 4,887

Other long-term liabilities 53 142
-------------- ---------------
Total liabilities 5,946 5,029
-------------- ---------------

Total stockholders' equity 6,345 15,215
-------------- ---------------
Total liabilities and stockholders'
equity $12,291 $20,244
============== ===============

(1) The December 31, 2005 balances are unaudited.
(2) The December 31, 2004 balances were derived from the audited
consolidated financial statements.