Cognitronics Reports Second Quarter Results.DANBURY, Conn. -- Cognitronics Corporation (AMEX AMEX See: American Stock Exchange :CGN CGN Compagnie Générale de Navigation (sur le Lac Léman; French, cruise companie on Lake Geneva, Switzerland) CGN Cancer Genetics Network CGN Guided Missile Cruiser (Nuclear Propulsion) CGN Cyber Gaming Network ) today reported a net loss for the second quarter ended June 30, 2006 of $2.6 million, or $.36 per share on a diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. basis, compared to a net loss of $1.7 million, or $.30 per share on a diluted basis, in the prior year's second quarter. The 2005 net loss included a loss from discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. of $.5 million, or $.08 per share on a diluted basis. Revenues for the second quarter were $1.6 million in 2006 versus $1.1 million in 2005. The company said that the $.5 million increase in second quarter 2006 revenues from the comparable 2005 quarter was primarily attributable to the revenues of ThinkEngine Networks, Inc., which was acquired in November 2005. "We have witnessed a continuing shift in the wireline segment of the telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. market resulting in increasing emphasis on capital investment in next generation services and build-out of the fiber optic infrastructure," said Brian J. Kelley, president and chief executive officer of Cognitronics. "In turn, this shift has caused a decreasing amount of available capital investment funding for the legacy wireline operations, impacting the demand for the company's CX Media Servers. As a result, the Company reorganized re·or·gan·ize v. re·or·gan·ized, re·or·gan·iz·ing, re·or·gan·iz·es v.tr. To organize again or anew. v.intr. To undergo or effect changes in organization. its CX Media Server group in the second quarter to reflect the current demand level for media servers in the legacy wireline space, including a reduction in and reassignment of personnel. "Concurrently, in view of the increased demand for next generation voice services and conferencing See teleconferencing. solutions, additional resources are being added to sales, marketing and R&D efforts supporting the VSR VSR Very Short Reach (Ciena/Cisco design for high speed, 10Gbps data) VSR Variable Speed Reversible VSR Very Short Reach (optical interconnection; Sprint) VSR Volume Search Radar 1000 products, including personnel reassigned from the CX Media Server group." For the six months ended June 30, 2006, the Company reported a net loss of $3.3 million, or $.46 per diluted share, versus a net loss of $2.5 million, or $.43 per diluted share, for the same period in 2005. Revenues for the six-month period were $5 million in 2006, compared to $2.8 million in 2005. The 2005 net loss included a loss from discontinued operations of $.7 million, or $.13 per share on a diluted basis. ABOUT COGNITRONICS Cognitronics is a leading supplier of media server solutions to the telecommunications industry. The CX Network Media Servers (CX Series) and VSR1000 are a cost-effective and highly scalable family of carrier class media server platforms, delivering advanced network media solutions in VoIP networks as well as in traditional AIN Ain, in the Bible Ain (ā`ĭn), in the Bible. 1 Town, N ancient Palestine. 2 See En-rimmon. Ain, department, France Ain (ăN), department (1990 pop. and TDM (Time Division Multiplexing) A technology that transmits multiple signals simultaneously over a single transmission path. Each lower-speed signal is time sliced into one high-speed transmission. circuit switched environments. For more information, visit the company's website at www.cognitronics.com. Statements contained herein which are not historical facts are forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. . The forward-looking statements in this release are made pursuant to the safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. provisions of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. Forward-looking statements involve a number of risks and uncertainties including, but not limited to, the continuance The adjournment or postponement of an action pending in a court to a later date of the same or another session of the court, granted by a court in response to a motion made by a party to a lawsuit. of reduced capital expenditures throughout the telecommunications market, variability of sales volume from quarter to quarter, product demand, market acceptance, litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. , risk of dependence on significant customers, third party suppliers and intellectual property rights, risks in product and technology development and other risk factors detailed in the company's Securities and Exchange Commission filings.
COGNITRONICS CORPORATION
SUMMARY OF RESULTS
Three Months
Ended June 30,
-------------------------
2006 2005
------------ ------------
Net revenues $1,576,000 $1,054,000
Loss from continuing operations ($2,572,000) ($1,241,000)
Loss from discontinued operations ($454,000)
Net loss ($2,572,000) ($1,695,000)
Loss per basic and diluted share:
Continuing operations ($.36) ($.22)
Discontinued operations ($.08)
Net loss ($.36) ($.30)
Weighted average number of basic and diluted
shares outstanding: 7,058,257 5,653,173
Six Months
Ended June 30,
-------------------------
2006 2005
------------ ------------
Net revenues $5,041,000 $2,775,000
Loss from continuing operations ($3,322,000) ($1,739,000)
Loss from discontinued operations ($711,000)
Cumulative effect of change in accounting
principle $36,000
Net loss ($3,286,000) ($2,450,000)
Loss per basic and diluted share:
Continuing operations ($.47) ($.31)
Discontinued operations ($.13)
Cumulative effect of change in accounting
principle $.01
Net loss ($.46) ($.43)
Weighted average number of basic and diluted
shares outstanding 7,104,496 5,643,571
SUMMARY OF FINANCIAL POSITION
June 30, December 31,
2006 2005
------------ ------------
Cash, cash equivalents and marketable
securities $5,296,000 $8,120,000
Working capital $4,516,000 $7,251,000
Total assets $15,157,000 $21,205,000
Total stockholders' equity $10,229,000 $14,015,000
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