CoSine Communications Announces Financial Results for the Quarter Ended September 30, 2006


SAN JOSE, Calif., Nov. 2, 2006 (PRIMEZONE) -- 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 $134,000 and a net loss of $225,000, or $0.02 per share for the three months ended September 30, 2006, as compared to revenues of $785,000 and a net loss of $31,000 or $0.00 loss per share for the three months ended September 30, 2005. Revenues for the nine months ended September 30, 2006 were $1,233,000 and net loss was $146,000 or $0.01 loss per share, as compared to revenues of $2,381,000 and a net loss of $1,542,000 or $0.15 loss per share for the nine months ended September 30, 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    Nine months ended
                                 September 30,         September 30,
                                2006       2005       2006       2005
                              -------    -------    -------    -------
 Revenue:
   Product                    $    --    $    --    $    --    $   216
   Service                        134        785      1,233      2,165
                              -------    -------    -------    -------
      Total revenue               134        785      1,233      2,381
 Cost of revenue                  366        702      1,469      1,545
                              -------    -------    -------    -------

 Gross profit (loss)             (232)        83       (236)       836

 Operating expenses:
 Research and development          --         --         --        103
 Sales and marketing               --         --         --        105
 General and administrative       295        422        906      2,825
 Restructuring and
  impairment charges               --         --         --        (91)
                              -------    -------    -------    -------
 Total operating expenses         295        422        906      2,942
                              -------    -------    -------    -------

 Loss from operations            (527)      (339)    (1,142)    (2,106)

 Interest income and other        302        191        996        470
                              -------    -------    -------    -------
 Loss before income
  tax benefits                   (225)      (148)      (146)    (1,636)

 Income tax benefits               --       (117)        --        (94)
                              -------    -------    -------    -------
 Net loss                     $  (225)   $   (31)   $  (146)   $(1,542)
                              ========   =======    =======    =======
 Basic and diluted net
  loss per share              $ (0.02)   $ (0.00)   $ (0.01)   $ (0.15)

 Shares used in computing
  basic and diluted net
  loss per share               10,091     10,091     10,091     10,095


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


                                           September 30,   December 31,
                                                2006         2005 (a)
                                             ---------      ---------
 ASSETS                                     (Unaudited)
 Current assets:
  Cash and cash equivalents                  $  15,740      $  12,417
  Short-term investments                         7,254         10,749
  Accounts receivable, trade                        96             96
  Other receivables                                 19            209
  Prepaid expenses and other
   current assets                                  114            119
                                             ---------      ---------
 Total current assets                           23,223         23,590
 Long-term deposits                                 --            250
                                             ---------      ---------
                                             $  23,223      $  23,840
                                             =========      =========

 LIABILITIES AND STOCKHOLDERS' EQUITY
  Current liabilities:
    Accounts payable                         $     412      $     237
    Other accrued liabilities                      210            874
    Deferred revenue                                87            126
                                             ---------      ---------
 Total current liabilities                         709          1,237

 Stockholders' equity:
   Common stock                                      1              1
   Additional paid-in capital                  538,977        538,947
   Accumulated other comprehensive income          658            632
   Accumulated deficit                        (517,122)      (516,977)
                                             ---------      ---------
 Total stockholders' equity                     22,514         22,603
                                             =========      =========
                                             $  23,223      $  23,840
                                             =========      =========

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


            

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