EXHIBIT 99.1
COSINE COMMUNICATIONS ANNOUNCES
FIRST QUARTER FISCAL 2005 FINANCIAL RESULTS
SAN JOSE, CALIF., May 16, 2005 —CoSine Communications, Inc. (Nasdaq: COSN), a provider of customer support services for managed, network-based IP and broadband service providers, today announced revenue for the quarter ended March 31, 2005 of $ 897,000 and a net loss of $ 878,000 or $ 0.09 loss per share, as compared to revenue of $4.5 million and a net loss of $ 7.4 million or $ 0.74 loss per share for the quarter ended March 31, 2004.
About Cosine Communications
CoSine Communications was founded in 1998 as a global telecommunications equipment supplier to empower service providers to deliver a compelling portfolio of managed, network-based IP and broadband services to consumers and business customers. Currently, CoSine’s business consists primarily of a customer service capability operated under contract by a third party.
Safe Harbor Warning
“Safe Harbor” Statement Under the Private Securities Litigation Reform Act of 1995: This release contains forward-looking statements, which include, among others, statements concerning CoSine’s expected financial performance, exploration of strategic alternatives, and business outlook, expected performance and developments. The company uses words such as “anticipate,” “believe,” “plan,” “expect,” “future,” “intend” and similar expressions to identify forward-looking statements. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those reflected in the forward-looking statements.
Factors that might cause such a difference include, but are not limited to, Cosine’s ability to identify and effectuate desirable strategic alternatives, the time and costs required to explore and investigate possible transactions and other corporate actions, management and board interest in and distraction due to exploring and investigating strategic alternatives, the reactions, either positive or negative, of investors, competitors, customers, employees and others to CoSine exploring possible strategic alternatives and opportunities and to any specific strategic alternative or opportunity selected by CoSine and the continued downturn in the telecommunications industry and slow development of the market for network-based IP services, all as may be discussed in more detail on pages 30 through 36 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2004. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management’s opinions only as of the date hereof. CoSine undertakes no obligation to revise or publicly release the results of any revision to these forward-looking statements.
For additional information contact:
Terry Gibson
(408) 236-7518
E-mail: Terry.Gibson@Cosinecom.com
CoSine Communications, Inc.
CONSOLIDATED STATEMENT OF OPERATIONS
(In conformity with generally accepted accounting principles)
(in thousands, except per share data)
Three months ended | ||||||||
March 31, | ||||||||
2005 | ||||||||
(unaudited) | 2004 | |||||||
Revenue | $ | 897 | $ | 4,455 | ||||
Cost of sales | 454 | 1,497 | ||||||
Gross profit | 443 | 2,958 | ||||||
Operating expenses: | ||||||||
Research and development | 103 | 5,255 | ||||||
Sales and marketing | 105 | 3,383 | ||||||
General and administrative | 1,305 | 1,708 | ||||||
Restructuring and impairment charges | (91 | ) | 35 | |||||
Total operating expenses | 1,422 | 10,381 | ||||||
Loss from operations | (979 | ) | (7,423 | ) | ||||
Interest income and expense and other, net | 113 | 81 | ||||||
Loss before income tax (benefits) provision | (866 | ) | (7,342 | ) | ||||
Income tax (benefits) provision | 13 | 43 | ||||||
Net loss | $ | (879 | ) | $ | (7,385 | ) | ||
Basic and diluted net loss per share | $ | (0.09 | ) | $ | (0.74 | ) | ||
Shares used in computing basic and diluted net loss per share | 10,122 | 10,010 |
CoSine Communications, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In conformity with generally accepted accounting principles)
(in thousands)
March 31, 2005 | December 31, | |||||||
(unaudited) | 2004 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 11,020 | $ | 9,203 | ||||
Short-term investments | $ | 12,640 | 15,710 | |||||
Accounts receivable, trade | 602 | 1,328 | ||||||
Accounts receivable, other | 93 | 483 | ||||||
Inventory | — | — | ||||||
Prepaid expenses and other current assets | 833 | 949 | ||||||
Total current assets | 25,187 | 27,673 | ||||||
Property and equipment, net | — | — | ||||||
Long-term deposits | 528 | 150 | ||||||
$ | 25,715 | $ | 27,823 | |||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 225 | $ | 252 | ||||
Accrued warranty liability | 157 | 157 | ||||||
Other accrued liabilities | 1,522 | 3,129 | ||||||
Accrued compensation | 175 | 412 | ||||||
Deferred revenue | 710 | 509 | ||||||
Current portion of equipment and working capital loans | — | — | ||||||
Total current liabilities | 2,789 | 4,459 | ||||||
Accrued rent | — | — | ||||||
Total liabilities | 2,789 | $ | 4,459 | |||||
Stockholders’ equity (net capital deficiency): | ||||||||
Series A convertible preferred stock | — | — | ||||||
Common stock | 1 | 1 | ||||||
Additional paid-in capital | 538,947 | 540,028 | ||||||
Notes receivable from stockholders | — | (1,520 | ) | |||||
Accumulated other comprehensive income (loss) | 616 | 614 | �� | |||||
Deferred compensation | — | — | ||||||
Accumulated deficit | (516,637 | ) | (515,759 | ) | ||||
Stockholders’ equity | 22,926 | 23,364 | ||||||
$ | 25,715 | $ | 27,823 | |||||
1 Amounts are derived from the December 31, 2004 audited financial statements. |