COSINE COMMUNICATIONS ANNOUNCES FINANCIAL RESULTS
FOR THE QUARTER ENDED DECEMBER 31, 2006
SAN JOSE, CALIF., March 23, 2007 -- CoSine Communications, Inc. (COSN.PK) today announced revenues of $1,361,000 and a net income of $449,000 or $0.04 per share for the year ended December 31, 2006 as compared to revenues of $3,315,000 and net loss of $1,218,000 or $0.12 loss per share for the year ended December 31, 2005. Revenues for the quarter ended December 31, 2006 were $128,000 and net income was $595,000, or $0.06 per share, as compared to revenues of $934,000 and a net income of $325,000 or $0.03 per share for the three months ended December 31, 2005.
Net income for the quarter and year ended December 31, 2006 included a $640,000 gain on liquidation of foreign subsidiaries. The gain is due to the cumulative effect of gains and losses of converting foreign subsidiaries financial statements into United States dollars. This gain, which had been deferred prior to the year ended December 31, 2006, was recognized in 2006 with the liquidation of the subsidiaries.
CoSine’s strategic plan is to redeploy its existing resources to identify and acquire new business operations. As a part of its strategic plan, CoSine completed the sale of its intellectual property and closed its customer service operations effective December 31, 2006.
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. CoSine has ceased its customer service operations effective December 31, 2006. CoSine’s strategic plan is to redeploy its existing resources to identify and acquire new business operations. CoSine’s redeployment strategy will involve the acquisition of one or more operating businesses with existing or prospective taxable earnings. This strategy may allow CoSine to realize future cash flow benefits from its net operating loss carry-forwards (“NOLs”). As of this date, no candidates have been identified, and no assurance can be given that CoSine will find suitable candidates, and if it does, that it will be able to utilize its existing NOLs.
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. CoSine 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 acquisitions, 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 and executing possible strategic acquisitions. A detailed discussion of these factors and other risks that affect CoSine's business is contained in its SEC filings, including its most recent reports on Form 10-K and Form 10-Q, particularly under the heading "Risk Factors." 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:
CoSine Communications, Inc.
Terry Gibson
(408) 236-7518
E-mail: Terry.Gibson@Cosinecom.com
CoSine Communications, Inc.
CONSOLIDATED STATEMENT OF OPERATIONS
(in thousands, except per share data)
| | | Twelve months ended | | | | Twelve months ended | |
| | | Dec 31, | | | | Dec 31, | |
| | | 2006 | | 2005 | | | | 2006 | | 2005 | |
| | | | | | | | | | | | |
| Revenue: | | | | | | | | | | | |
| Product | | $ - | | $ - | | | | $ - | | $ 216 | |
| Service | | | 128 | | | 934 | | | | | | 1,361 | | | 3,099 | |
| Total revenue | | | 128 | | | 934 | | | | | | 1,361 | | | 3,315 | |
| Cost of revenue | | | 194 | | | 504 | | | | | | 1,663 | | | 2,049 | |
| | | | | | | | | | | | | | | | | |
| Gross profit (loss) | | | (66 | ) | | 430 | | | | | | (302 | ) | | 1,266 | |
| | | | | | | | | | | | | | | | | |
| Operating expenses: | | | | | | | | | | | | | | | | |
| Research and development | | | - | | | - | | | | | | - | | | 103 | |
| Sales and marketing | | | - | | | - | | | | | | - | | | 105 | |
| General and administrative | | | 410 | | | 402 | | | | | | 1,316 | | | 3,227 | |
| Restructuring and impairment charges (credits) | | | - | | | - | | | | | | - | | | (91 | ) |
| Total operating expenses | | | 410 | | | 402 | | | | | | 1,316 | | | 3,344 | |
| | | | | | | | | | | | | | | | | |
| Income (Loss) from operations | | | (476 | ) | | 28 | | | | | | (1,618 | ) | | (2,078 | ) |
| | | | | | | | | | | | | | | | | |
| Interest income and expense and other, net | | | 1,019 | | | 162 | | | | | | 2,015 | | | 632 | |
| | | | | | | | | | | | | | | | | |
| Income (Loss) before income tax benefit | | | 543 | | | 190 | | | | | | 397 | | | (1,446 | ) |
| | | | | | | | | | | | | | | | | |
| Income tax benefit | | | (52 | ) | | (135 | ) | | | | | (52 | ) | | (228 | ) |
| | | | | | | | | | | | | | | | | |
| Net Income (Loss) | | $ | 595 | | $ | 325 | | | | | $ | 449 | | $ | (1,218 | ) |
| | | | | | | | | | | | | | | | | |
| Basic net income (loss) per share | | $ | 0.06 | | $ | 0.03 | | | | | $ | 0.04 | | $ | (0.12 | ) |
| | | | | | | | | | | | | | | | | |
| Diluted net income (loss) per share | | $ | 0.06 | | $ | 0.03 | | | | | $ | 0.04 | | $ | (0.12 | ) |
| Shares used in computing basic net loss per share | | | | | | | | | | | | | | | | |
| Basic | | | 10,091 | | | 10,091 | | | | | | 10,091 | | | 10,094 | |
| Diluted | | | 10,096 | | | 10,091 | | | | | | 10,096 | | | 10,094 | |
CoSine Communications, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
| | | December 31, 2006 (1) | | December 31, 2005 (1) | |
| | | | | | |
| ASSETS | | | | | |
| Current assets: | | | | | |
| Cash and cash equivalents | | $ | 5,207 | | $ | 12,417 | |
| Short-term investments | | | 17,650 | | | 10,749 | |
| Accounts receivable, trade | | | 55 | | | 96 | |
| Other receivables | | | 68 | | | 209 | |
| Prepaid expenses and other current assets | | | 56 | | | 119 | |
| Total current assets | | | 23,036 | | | 23,590 | |
| Long-term deposits | | | - | | | 250 | |
| | | $ | 23,036 | | $ | 23,840 | |
| | | | | | | | |
| LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | | | |
| Current liabilities: | | | | | | | |
| Accounts payable | | $ | 320 | | $ | 237 | |
| Other accrued liabilities | | | 239 | | | 874 | |
| Deferred revenue | | | - | | | 126 | |
| Total current liabilities | | | 559 | | | 1,237 | |
| Total liabilities | | | 559 | | | 1,237 | |
| | | | | | | | |
| Stockholders’ equity: | | | | | | | |
| Common stock | | | 1 | | | 1 | |
| Additional paid-in capital | | | 538,987 | | | 538,947 | |
| Accumulated other comprehensive income | | | 17 | | | 632 | |
| Accumulated deficit | | | (516,528 | ) | | (516,977 | ) |
| Total stockholders’ equity | | | 22,477 | | | 22,603 | |
| | | $ | 23,036 | | $ | 23,840 | |
| | | | | | | | |
1 Amounts are derived from the December 31, 2006 and 2005 audited financial statements.
