CoSine Communications, Inc. Announces Financial Results for the Quarter Ended June 30, 2015

Aug 28, 2015, 17:06 ET from CoSine Communications, Inc.

LOS GATOS, Calif., Aug. 28, 2015 /PRNewswire/ -- CoSine Communications, Inc. ("CoSine") (Other OTC: COSN), today announced net income of $1,475,000, or $0.05 per basic and diluted common share, for the quarter ended June 30, 2015, as compared to a net loss of $143,000, or $(0.01) per basic and diluted common share, for the quarter ended June 30, 2014. The results for the quarter ended June 30, 2015 include net sales of $26,796,000 and an operating loss of $734,000 from the previously announced acquisition of API Group Plc ("API"), for the period of April 17, 2015 (date of effective control) to June 30, 2015, as well as $2,524,000 in foreign currency remeasurement gains and $1,164,000 in gains on sale of CoSine's remaining holdings in the common stock of Nathan's Famous, Inc.

For the six months ended June 30, 2015, CoSine had a net loss of $1,503,000, or $(0.08) per basic and diluted common share, as compared to a net loss of $308,000, or $(0.03) per basic and diluted common share, for the six months ended June 30, 2014. In addition to the inclusion of the operating results of API discussed above, results for the six months ended June 30, 2015 include the transactional expenses incurred in connection with the tender offer for API and related transactions, as well as gains totaling $1,844,000 from the sale of CoSine's holdings in the common stock of Nathan's Famous, Inc.

Acquisition of API Group Plc and Related Transactions

As previously reported, on January 20, 2015, CoSine entered into a contribution agreement with Steel Partners Holdings L.P. ("SPH") pursuant to which CoSine issued to a wholly owned subsidiary of SPH 16,500,000 newly issued shares of CoSine's common stock as well as 12,761 shares of CoSine's newly designated and issued 7.5% Series B Non-Voting Cumulative Preferred Stock with a face value of $12,761,000 in exchange for (i) 24,807,203 ordinary shares of API representing approximately 32.3% of the entire existing issued share capital in API, and (ii) 445,456 shares of common stock of Nathan's Famous, Inc. (the "Contribution"). As a result of the Contribution, SPH, through its wholly owned subsidiaries, now controls approximately 80.6% of CoSine's issued and outstanding common stock.

Also as previously reported, on January 22, 2015, Cedar 2015 Limited, a wholly-owned subsidiary of CoSine incorporated in England and Wales ("Cedar Bidco"), then commenced a cash tender offer to acquire all of the remaining issued and to be issued shares in API not already owned by CoSine or Cedar Bidco (the "Offer"). At March 19, 2015, Cedar Bidco's holdings, when combined with tendered API shares, exceeded a total of over 97% of the entire existing issued share capital in API. Having received acceptances of the Offer in excess of 90% of the API shares to which the Offer related, including the respective voting rights thereof, Cedar Bidco then exercised its rights in accordance with applicable UK law to acquire compulsorily any remaining API shares to which the Offer related on the same terms as the Offer. As of May 11, 2015, the API board was reconstituted pursuant to which CoSine now has indirect control of the API board. As of May 15, 2015, Cedar Bidco had acquired legal or beneficial ownership of 100% of the existing issued share capital in API.

About CoSine Communications

CoSine's primary operating subsidiary, API, is a manufacturer and distributor of foils, films and laminates used to enhance the visual appeal of products and packaging, serving industrial markets in Europe, North America and Australasia from production operations in the UK and US. Headquartered in Poynton, North West England, API's global operations employ more than 500 people in 12 locations.

CoSine's Certificate of Incorporation limits the ability of any group or person to acquire 5% or more of CoSine's common stock (subject to certain exceptions as provided in the Certificate of Incorporation).

CoSine has also adopted a Rights Agreement to deter acquisitions of 5.0% or more of CoSine's common stock (subject to certain exceptions) by any group or person.

CoSine's common stock is currently traded on the OTC Pink® marketplace under the symbol COSN and its website is www.cosinecom.com.

Cautionary note regarding forward-looking statements

This press release contains certain forward-looking statements with respect to the financial condition, results of operations and business of CoSine. These forward-looking statements can be identified by the fact that they do not relate only to historical or current facts. Forward-looking statements often use words such as "anticipate", "target", "expect", "estimate", "intend", "plan", "goal", "believe", "will", "may", "should", "would", "could" or other words of similar meaning. These statements are based on assumptions and assessments made by the board of directors of CoSine in light of its experience and its perception of historical trends, current conditions, expected future developments and other factors it believes appropriate. By their nature, forward-looking statements involve risk and uncertainty, and the factors described in the context of such forward-looking statements in this press release could cause actual results and developments to differ materially from those expressed in or implied by such forward-looking statements. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in this press release. CoSine assumes no obligation to update or correct the information contained in this press release, whether as a result of new information, future events or otherwise, except to the extent legally required.

The statements contained in this press release are made as at the date of this press release, unless some other time is specified in relation to them, and issuance of this press release shall not give rise to any implication that there has been no change in the facts set out in this press release since such date. Nothing contained in this press release shall be deemed to be a forecast, projection or estimate of the future financial performance of CoSine except where expressly stated.

For additional information contact:

Terry Gibson (408) 399-6494 E-mail: Terry.Gibson@spcorpservices.com

CoSine Communications, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(in thousands, except per share)

Three months ended

Six months ended

June 30,

June 30, 

2015

2014

2015

2014

Net sales

$  26,796

$      -

$  26,796

$      -

Cost of goods sold

22,694

-

22,694

-

Gross profit

4,102

-

4,102

-

Impairment loss on available for sale investment

-

-

5,597

-

Selling, general and administrative expenses

5,694

144

6,690

308

Loss from operations

(1,592)

(144)

(8,185)

(308)

Dividend income

-

-

5,552

-

Interest (expense) income, net

(558)

1

(894)

1

Gain on sale of available for sale securities

1,164

-

1,844

-

Gain on foreign currency remeasurement

2,524

-

586

-

Other income

11

-

11

-

Income (loss) before provision for income taxes

1,549

(143)

(1,086)

(307)

Tax provision

74

-

417

1

Net income (loss)

$   1,475

$   (143)

$  (1,503)

$   (308)

Net income (loss) less preferred stock dividends

$   1,236

$   (143)

$  (1,934)

$   (308)

Basic net income (loss) per common share

$     0.05

$  (0.01)

$    (0.08)

$  (0.03)

Diluted net income (loss) per common share

$     0.05

$  (0.01)

$    (0.08)

$  (0.03)

Shares used in computing basic and diluted net income (loss) per common share:

Basic

26,391

9,890

24,567

9,866

Diluted

26,447

9,890

24,567

9,866

 

CoSine Communications, Inc.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

June 30, 2015 (unaudited)

December 31, 2014

ASSETS

Current assets:

Cash and cash equivalents

$          40,378

$           17,710

Trade and other receivables, net

27,509

-

Inventories

20,987

-

Prepaid and other current assets

6,994

5

Total current assets

95,868

17,715

Investment in joint venture interest

1,387

-

Property, plant and equipment, net

44,488

-

Goodwill

20,829

-

Other intangibles, net

24,021

-

Other non-current assets

45

3

$        186,638

$           17,718

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

  Trade payables

$          23,505

$               281

Accrued liabilities

6,517

343

Short-term debt

798

-

Current portion of long-term debt

458

-

Total current liabilities

31,278

624

Long-term debt

61,248

-

Accrued pension liability

22,242

-

Deferred income tax liabilities

852

-

Total liabilities

115,620

624

Preferred stock

12,761

-

Stockholders' equity:

Common stock

3

1

Additional paid-in capital

580,155

538,674

Accumulated other comprehensive income

1,183

-

Accumulated deficit

(523,084)

(521,581)

Total stockholders' equity

58,257

17,094

Total liabilities and stockholders' equity

$        186,638

$           17,718

 

SOURCE CoSine Communications, Inc.



RELATED LINKS

http://www.cosinecom.com