LOS GATOS, Calif., Aug. 7 /PRNewswire-FirstCall/ -- CoSine Communications, Inc. (Pink Sheets: COSN), today announced net loss of $151,000 or $(0.01) loss per share for the quarter ended June 30, 2009 as compared to net income of $22,000 or $0.00 per share for the quarter ended June 30, 2008.
CoSine's current strategic plan is to enhance stockholder value by pursuing opportunities to redeploy our assets through an acquisition of one or more operating businesses with existing or prospective taxable earnings that can be offset by use of our net operating loss carry-forwards ("NOLs"). In furtherance of that strategic plan, Cosine today also announced that it amended its share purchase rights plan, dated September 1, 2005, which provided for a dividend distribution of one preferred share purchase right for each outstanding share of CoSine's common stock, paid on September 12, 2005 to CoSine's stockholders of record at the close of business on that date. The amendment extends the expiration date of the rights from September 1, 2009 until September 1, 2011, unless earlier redeemed, exchanged, or amended by the Board of Directors. The amendment was not made in response to any pending takeover bid for CoSine. The primary purpose of the plan is to preserve CoSine's existing and projected NOLs for tax purposes. Under the Internal Revenue Code and rules promulgated by the Internal Revenue Service, CoSine can carry forward these NOLs in certain circumstances to offset current and future earnings, and thus reduce its federal income tax liability (subject to certain requirements and restrictions). CoSine's future use of these NOLs could be substantially limited or lost altogether, however, in the event of an "ownership change," as defined under Section 382 of the Internal Revenue Code.
Previously, on November 15, 2005, CoSine stockholders had approved an amendment to CoSine's Certificate of Incorporation restricting direct and indirect acquisitions of CoSine capital stock (or options, warrants or other rights to acquire CoSine's capital stock, or securities convertible or exchangeable into CoSine capital stock) if such acquisition would affect the percentage of CoSine's capital stock that is treated as owned by a "5% stockholder." That amendment is similarly intended to preserve CoSine's existing and projected NOLs for tax purposes in furtherance of CoSine's strategic plan.
As of June 30, 2009, CoSine had NOLs of approximately $353 million to offset against future taxable income. The amount of NOLs has not been audited or otherwise validated by the U.S. Internal Revenue Service and could challenged by the U.S. Internal Revenue Service. No assurance can be given that we will find suitable candidates, and if we do, that we will be able to utilize our existing NOLs.
The above descriptions of CoSine's rights plan and CoSine's amendment to its Certificate of Incorporation are brief summaries of the restrictions on any transfers and acquisitions of CoSine's stock which could limit or impair CoSine's ability to utilize its NOLs. All stockholders and prospective stockholders are urged to read the full texts of the transfer restrictions which are contained in CoSine's SEC filings and which are also available without cost upon written request to CoSine.
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 ceased its customer service operations effective December 31, 2006.
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 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: Terry Gibson (408) 399-6494 E-mail: Terry.Gibson@Cosinecom.com CoSine Communications, Inc. STATEMENTS OF OPERATIONS (in thousands, except per share data) Three months Six months ended ended June 30, June 30, 2009 2008 2009 2008 ---- ---- ---- ---- Revenue: Product $ - $ - $ - $ - Service - - - - --- --- --- --- Total revenue - - - - Cost of revenue - - - - --- --- --- --- Gross profit (loss) - - - - Operating expenses: Research and development - - - - Sales and marketing - - - - General and administrative 188 145 413 322 --- --- --- --- Total operating expenses 188 145 413 322 --- --- --- --- Loss from operations (188) (145) (413) (322) Interest income and other 37 167 108 396 --- --- --- --- Income (loss) before income tax provision (151) 22 (305) 74 Income tax provision - - 1 - --- --- --- --- Net (loss) income $(151) $22 $(306) $74 ----- --- ----- --- Basic net (loss) income per share $(0.01) $0.00 $(0.03) $0.01 ====== ===== ====== ===== Diluted net (loss) income per share $(0.01) $0.00 $(0.03) $0.01 ====== ===== ====== ===== Shares used in computing basic and diluted net income per share Basic 10,091 10,091 10,091 10,091 ====== ====== ====== ====== Diluted 10,091 10,094 10,091 10,091 ====== ====== ====== ====== CoSine Communications, Inc. CONDENSED BALANCE SHEETS (in thousands) June 30, 2009 December 31, (Unaudited) 2008 (1) ------------- ------------ ASSETS Current assets: Cash and cash equivalents $19,139 $9,155 Short-term investments 3,708 13,997 Other receivables 24 96 Prepaid expenses and other current assets 17 31 -- -- Total current assets 22,888 23,279 Long-term deposits 3 3 -- -- $22,891 $23,282 ------- ------- LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $188 $207 Other accrued liabilities 28 53 -- -- Total current liabilities 216 260 Stockholders' equity: Common stock 1 1 Additional paid-in capital 539,077 539,060 Accumulated other comprehensive income 30 88 Accumulated deficit (516,433) (516,127) -------- -------- Total stockholders' equity 22,675 23,022 ------ ------ $22,891 $23,282 ------- ------- 1) Amounts are derived from the December 31, 2008 audited financial statements.
CoSine Communications, Inc.
CONTACT: Terry Gibson of CoSine Communications, Inc., +1-408-399-6494,
Terry.Gibson@Cosinecom.com
Web Site: http://www.cosinecom.com/
