Cognitronics Reports Third Quarter Results

DANBURY, Conn., Nov. 15  /PRNewswire-FirstCall/ -- Cognitronics Corporation (AMEX:CGN) today reported a loss from continuing operations of $1.1 million, or $.19 per share on a diluted basis, for the quarter ended September 30, 2005 compared to a loss of $1.2 million, or $.21 per share on a diluted basis, a year ago.  Revenues from continuing operations for the third quarter were $1 million in 2005 and $.8 million in 2004.

The company said that the $.2 million increase in third quarter sales was attributable to increased sales volume to a cable operator; also, during the third quarter, the company delivered approximately $2 million of equipment to a major telecommunications service provider which is expected to be recorded as sales in the fourth quarter of 2005.

"Over the past three months, the company, with Board approval, has initiated a strategic plan to focus on its core business -- media server solutions to the telecommunications industry," said Brian J. Kelley, president and chief executive officer of Cognitronics.  "In this connection, the company has entered into a definitive agreement to acquire ThinkEngine Networks, Inc. and has entered into negotiations to divest its European distributorship operations, Dacon Electronics Plc.  Both transactions are expected to be completed during the current quarter.

"From a market perspective, ThinkEngine represents diversification for Cognitronics.  With ThinkEngine's VSR1000, we now have a broader product offering which leverages our core AIN expertise with a purpose-built, SIP- based, VoIP solution. We intend to market the VSR1000 to our existing customers and, as importantly, diversify into new markets with new channel partners. We are confident that the VSR1000's total cost of ownership is unparalleled in the industry and will present exciting opportunities for service providers as they continue to build their VoIP networks."

The loss from discontinued operations was $.3 million, or $.05 per share on a diluted basis; additionally, an impairment charge to goodwill of $.3 million, or $.06 per share on a diluted basis, related to these operations was recorded in the quarter.  In 2004, income from discontinued operations was $.1 million, or $.02 per share on a diluted basis.

The net loss for the three months ended September 30, 2005 was $1.7 million, or $.29 per share on a diluted basis, compared to $1.3 million, or $.24 per share on a diluted basis in the comparable 2004 quarter.

For the nine months ended September 30: (a) the loss from continuing operations was $2.8 million, or $.49 per share on a diluted basis, on revenues of $3.8 million compared to $2.4 million, or $.44 per share on a diluted basis, in 2004; (b) the loss from discontinued operations was $1 million, or $.17 per share on a diluted basis, in 2005 versus income of $.1 million, or $.02 per share on a diluted basis, in 2004; (c) an impairment charge of $.3 million, or $.06 per share on a diluted basis, was recorded and  (d) the net loss was $4.1 million, or $.72 per share on a diluted basis, in 2005 and $2.3 million, or $.42 per share on a diluted basis, in 2004.

"During the fourth quarter of 2005, sales activity has increased and the company expects substantive orders for its CX Media Servers from customers, the timing of which continues to be dependent on the customers' decisions as to when to introduce new services to its subscribers.  Further, the company entered the fourth quarter with a strong cash, cash equivalents and marketable securities aggregating over $10 million," concluded Mr. Kelley.

Cognitronics is a leading supplier of media server solutions to the telecommunications industry. The company's Cognitronics Exchange Network Media Servers (CX Series) 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.  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 September 30,
                                                    2005          2004
  Net revenues                                   $986,000       $771,000
  Loss from continuing operations             ($1,065,000)   ($1,192,000)
  Income/Loss from discontinued operations      ($266,000)     ($156,000)
  Impairment of goodwill                        ($319,000)
  Net loss                                    ($1,650,000)   ($1,348,000)
  Loss per basic and diluted share:
    Continuing operations                           ($.19)         ($.21)
    Discontinued operations                         ($.05)         ($.03)
    Impairment of goodwill                          ($.06)
  Net loss                                          ($.29)         ($.24)
  Weighted average number of basic and
   diluted shares outstanding                   5,685,997      5,585,293


                                                       Nine Months
                                                   Ended September 30,
                                                   2005           2004
  Net sales                                    $3,761,000     $3,770,000
  Loss from continuing operations             ($2,804,000)   ($2,446,000)
  Income/Loss from discontinued operations      ($977,000)      $123,000
  Impairment of goodwill                        ($319,000)
  Net loss                                    ($4,100,000)   ($2,323,000)
  Income/Loss per basic and diluted share:
    Continuing operations                           ($.49)         ($.44)
    Discontinued operations                         ($.17)          $.02
    Impairment of goodwill                          ($.06)
  Net loss                                          ($.72)         ($.42)
  Weighted average number of basic and
   diluted shares outstanding                   5,657,993      5,554,861


                      SUMMARY OF FINANCIAL POSITION

                                            September 30,     December 31,
                                                2005              2004
  Cash, cash equivalents and marketable
   securities                               $10,172,000        $8,069,000
  Working capital                            $9,304,000       $13,132,000
  Total assets                              $17,631,000       $18,956,000
  Total stockholders' equity                $11,205,000       $15,015,000


DATASOURCE: Cognitronics Corporation



CONTACT:  Harold F. Mayer of Cognitronics Corporation,

[phone]



Web site:  http://www.cognitronics.com/ 

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