CGN Cognitronics Corp

DANBURY, Conn., May 15 /PRNewswire-FirstCall/ -- Cognitronics(R) Corporation (AMEX:CGN) today reported a loss from continuing operations of $.8 million, or $.10 per share on a diluted basis, for the quarter ended March 31, 2006 compared to a loss from continuing operations of $.5 million, or $.09 per share on a diluted basis, a year ago. Included in the 2006 loss from continuing operations are non-cash expenses of $244,000 related to a change in accounting for equity-based compensation and amortization of costs related to the ThinkEngine acquisition of $117,000. Net revenues for the first quarter were $3.5 million in 2006 and $1.7 million in 2005. The company said that revenues doubled in the 2006 quarter over a year ago due to increased sales of $1.9 million shipped to a telecommunications service provider in 2005 and recognized as a sale in the 2006 first quarter and sales of $.5 million of products acquired in the ThinkEngine Networks acquisition in the 2005 fourth quarter, offset, in part, by lower sales of $.7 million to a telecommunications system integrator. The loss from continuing operations was also impacted by higher research and development and selling, general and administrative expenses of $.6 million and $.3 million, respectively, primarily attributable to the ThinkEngine Networks operations. The net loss for the three months ended March 31, 2006 was $.8 million, or $.10 per share on a diluted basis versus $.8 million, or $.13 per share on a diluted basis, in the same quarter a year ago, which, in the 2006 quarter, included a gain of $36,000, or $.01 per share on a diluted basis, for the cumulative effect of the change in accounting principle and, in the 2005 quarter, included a loss from discontinued operations of $.3 million, or $.05 per share on a diluted basis. "The acquisition of ThinkEngine Networks is the cornerstone of our strategy to provide expanded applications and system solutions beyond the traditional TDM and AIN networks," said Brian J. Kelley, president and chief executive officer of Cognitronics. "The integration of the two companies has been successful and the company is expanding its R&D efforts for both the CX Series and VSR1000 products in order to better position ourselves as a leader in the media server marketplace." Cognitronics is a leading supplier of media server solutions to the telecommunications industry. The company's 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 and TDM circuit switched environments. For more information, visit the company's website at http://www.cognitronics.com/. Statements contained herein which are not historical facts are forward- looking statements. The forward-looking statements in this release are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and are generally characterized by the use of terms such as "believe," "expect" and "may". Although the Company believes that the expectations reflected in such forward-looking statements are based upon reasonable assumptions, the Company's actual results could differ materially from those set forth in forward-looking statements. Forward-looking statements involve a number of risks and uncertainties including, but not limited to, the continuance of reduced capital expenditures throughout the telecommunications market, variability of sales volume from quarter to quarter, product demand, market acceptance, 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 March 31, 2006 2005 Net revenues $3,465,000 $1,721,000 Loss from continuing operations ($750,000) ($498,000) Loss from discontinued operations ($257,000) Cumulative effect of change in accounting principle $36,000 Net loss ($714,000) ($755,000) Loss per basic and diluted share: From continuing operations ($.10) ($.09) From discontinued operations ($.05) Cumulative effect of change in accounting principle $.01 Net loss ($.10) ($.13) Weighted average number of shares outstanding: Basic 7,145,218 5,634,141 Diluted 7,145,218 5,634,141 SUMMARY OF FINANCIAL POSITION March 31, December 31, 2006 2005 Cash, cash equivalents and marketable securities $7,779,000 $8,120,000 Working capital $6,780,000 $7,251,000 Total assets $17,881,000 $21,205,000 Total stockholders' equity $12,846,000 $14,015,000 DATASOURCE: Cognitronics Corporation CONTACT: Harold F. Mayer, +1-203-830-3494 Web site: http://www.cognitronics.com/

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