Cognitronics Reports Second Quarter Results

Cognitronics Corporation (AMEX:CGN) today reported a net
loss for the second quarter ended June 30, 2006 of $2.6 million, or
$.36 per share on a diluted 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 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 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 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 solutions, additional resources are
being added to sales, marketing and R&D efforts supporting the VSR
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 and TDM
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. The forward-looking statements in this
release are made pursuant to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. 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.
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                       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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