ADDING: CoSine Communications Announces Financial Results for the Quarter Ended March 31, 2006


SAN JOSE, Calif., May 3, 2006 (PRIMEZONE) -- Please note that this version of CoSine Communications, Inc.'s earnings release incorporates the tabular information.

CoSine Communications, Inc. (Pink Sheets:COSN), a provider of customer support services for managed, network-based IP and broadband service providers, today announced revenues of $579,000 and a net loss of $126,000, or $0.01 loss per share for the three months ended March 31, 2006, as compared to revenues of $897,000 and a net loss of $878,000 or $0.09 loss per share for the three months ended March 31, 2005.

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's strategic plan is to redeploy its existing resources to identify and acquire new business operations, while continuing to provide support to CoSine's existing customers. 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 the Company will find suitable candidates, and if it does, that it will be able to utilize its existing NOLs.

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 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. Readers are advised to refer to risk factors, all as may be discussed in more detail on pages 4 through 8 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2005. 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.



                      CoSine Communications, Inc.
                 CONSOLIDATED STATEMENT OF OPERATIONS
                 (in thousands, except per share data)

                                             Three months ended
                                                 March 31,
                                           2006             2005
                                          ------------------------

 Revenue:
  Product                                $     --         $    216
  Service                                     579              681
                                         --------         --------
    Total revenue                             579              897
 Cost of revenue                              570              454
                                         --------         --------
 Gross profit                                   9              443
 Operating expenses:
  Research and development                     --              103
  Sales and marketing                          --              105
  General and administrative                  377            1,305
  Restructuring and impairment
   charges                                     --              (91)
                                         --------         --------
 Total operating expenses                     377            1,422
                                         --------         --------
 Loss from operations                        (368)            (979)
 Interest income and expense
  and other, net                              242              113
                                         --------         --------

 Loss before income tax
  (benefits) provision                       (126)            (866)
 Income tax (benefits)
  provision                                    --               12
                                         --------         --------

 Net loss                                $   (126)        $   (878)
                                         ========         ========
 Basic and diluted net loss per share    $  (0.01)        $  (0.09)
 Shares used in computing basic
  and diluted net loss per share           10,091           10,102


                     CoSine Communications, Inc.
                CONDENSED CONSOLIDATED BALANCE SHEETS
                            (in thousands)

                                       March 31, 2006   December 31,
                                        (Unaudited)        2005(a)
                                       ----------------------------

 ASSETS
 Current assets:
  Cash and cash equivalents               $ 18,094        $ 12,417
  Short-term investments                     4,673          10,749
  Accounts receivable, trade                   458              96
  Other receivables                             (0)            209
  Prepaid expenses and other 
   current assets                              129             119
                                       ----------------------------
 Total current assets                       23,354          23,590
 Long-term deposits                            190             250
                                       ----------------------------
                                          $ 23,544        $ 23,840
                                       ----------------------------
 LIABILITIES AND STOCKHOLDERS' EQUITY
 Current liabilities:
   Accounts payable                       $    254        $    237
  Other accrued liabilities                    728             874
  Deferred revenue                              62             126
                                       ----------------------------
 Total current liabilities                   1,044           1,237
                                       ----------------------------
 Total liabilities                           1,044           1,237
                                       ----------------------------
 Stockholders' equity:
  Common stock                                   1               1
  Additional paid-in capital               538,952         538,947
  Accumulated other comprehensive 
   income                                      650             632
  Accumulated deficit                     (517,103)       (516,977)
                                       ----------------------------
 Total stockholders' equity                 22,500          22,603
                                       ============================
                                          $ 23,544        $ 23,840
                                       ============================

 (a)  Amounts are derived from the December 31, 2005 audited 
      financial statements.


            

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