Onstream Media announced several recent corporate actions and business developments, including the termination of the Definitive Agreement to acquire Narrowstep an update on certain cost cutting measures and an update on the Company's pending patent applications.

Narrowstep Acquisition

On March 18, 2009, based on a provision in the Definitive Agreement, Onstream terminated the Definitive Agreement and the acquisition of Narrowstep.

Mr. Randy Selman, Onstream's President and CEO, stated, "Although we have spent significant time and resources over the past ten months pursuing the completion of the Narrowstep transaction, we have come to the conclusion that this transaction is no longer in the best interest of Onstream's shareholders. This decision was based on the recent adverse economic conditions as well as a directive from our shareholders, directors and other advisors to attain positive cash flow in the near-term. Unfortunately, as a result of our most recent assessment of Narrowstep's current financial condition, we determined that the proposed combination would not result in us meeting that objective."

Mr. Selman continued, "Although we still believe in the future of IPTV technology, it is currently more prudent to conserve our near-term cash resources while focusing on more immediate priorities, such as iEncode, our webcast-in-a-box appliance, and Streaming Publisher, our latest addition to the Digital Media Services Platform. We will continue to search for cost-effective ways of pursuing and developing technologies for our IPTV platform."

Cost Cutting Measures

During February 2009, the Company implemented actions that it believes will reduce its personnel, and certain other operating costs, by approximately $65,000 per month, most of which will be realized immediately, with the full amount of savings being attained starting in May, 2009.

Mr. Selman remarked, "Onstream's management is committed to bringing the Company to positive operating cash flow status as soon as possible, and furthermore we believe that the steps already taken to decrease certain personnel and other operating costs are an important element in reaching that goal. Furthermore, the Company has already undertaken a second phase of cost cutting focused on its facilities and operating infrastructure, which is expected to result in cost savings during the June 30, 2009 quarter, although it may take up to one year for the full financial impact of these measures to be seen. The Company will continue to closely monitor its revenue, expenses and other business activity to determine if further cost reductions are considered necessary and will take such actions if the Company is not recognizing positive operating cash flow by the end of the June 30, 2009 quarter."

Patents Pending

As part of its 2007 acquisition of Auction Video, the Company acquired the rights under a patent pending related to a video ingestion and flash transcoder developed by Auction Video, and in April 2008, as part of the Company's pursuit of the granting of that patent, revised the original patent application primarily for the purpose of splitting it into two separate applications, which, while related, are being evaluated separately by the U.S. Patent Office. At the time the Company issued its Form 10-Q for the period ended December 31, 2008, it reported that the U.S. Patent Office had issued non-final rejections of the claims pending in the first of the two applications and that the Company had filed a formal appeal to the latest non-final rejection.

Mr. Selman announced,"We were recently notified that the U.S. Patent Office has granted the actions sought by us in connection with our recent appeal, primarily a re-hearing of our claims by a different examiner group within the U.S. Patent Office. The Company continues to be optimistic about the prospects for the ultimate approval of this patent application and will provide updates on this matter as information becomes available."

The U.S. Patent Office has taken no formal action with regard to the second of the two applications