8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

Date of Report (date of earliest event reported):  November 2, 2006

COSINE COMMUNICATIONS, INC.

(Exact name of Registrant as specified in its charter)

Delaware	000-30715	94-3280301
(State or other jurisdiction of incorporation or organization)	(Commission File Number)	(I.R.S. Employer Identification Number)
560 S. Winchester Blvd., Suite 500 San Jose, California 95128
(Address of principal executive offices) (Zip Code)
(408) 236-7518
(Registrant’s telephone number, including area code)

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 Results of Operations and Financial Condition.

On November 2, 2006, CoSine Communications, Inc. issued a press release announcing its financial results for the quarter ended September 30, 2006. The full text of the press release is attached hereto as Exhibit 99.1 to this Current Report.

Item 9.01 Financial Statements and Exhibits.

     (c) Exhibits.

99.1 Press Release, dated November 2, 2006, of CoSine Communications, Inc.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

November 2, 2006	By:	/s/ TERRY GIBSON
		Terry Gibson,
		Chief Executive Officer, Chief Financial Officer and Secretary (Principal Executive, Financial and Accounting Officer and Duly Authorized Officer)

2

INDEX TO EXHIBITS

Exhibit No.	Description
99.1	Press Release, dated November 2, 2006, of CoSine Communications, Inc.

EX-99.1

EXHIBIT 99.1

COSINE COMMUNICATIONS ANNOUNCES FINANCIAL RESULTS

FOR THE QUARTER ENDED SEPTEMBER 30, 2006

SAN JOSE, CALIF., November 2, 2006 -- CoSine Communications, Inc. (COSN.PK), a provider of customer support services for managed, network-based IP and broadband service providers, today announced revenues of $134,000 and a net loss of $225,000, or $0.02 per share for the three months ended September 30, 2006, as compared to revenues of $785,000 and a net loss of $31,000 or $0.00 loss per share for the three months ended September 30, 2005. Revenues for the nine months ended September 30, 2006 were $1,233,000 and net loss was $146,000 or $0.01 loss per share, as compared to revenues of $2,381,000 and a net loss of $1,542,000 or $0.15 loss per share for the nine months ended September 30, 2005.

About Cosine Communications

CoSine Communications was founded in 1998 as a global telecommunications equipment supplier to empower service providers to deliver a compelling portfolio of managed, network-based IP and broadband services to consumers and business customers. CoSine’s strategic plan is to redeploy its existing resources to identify and acquire new business operations, while continuing to provide support to CoSine’s existing customers. CoSine’s redeployment strategy will involve the acquisition of one or more operating businesses with existing or prospective taxable earnings. This strategy may allow CoSine to realize future cash flow benefits from its net operating loss carry-forwards (“NOLs”). As of this date, no candidates have been identified, and no assurance can be given that the Company will find suitable candidates, and if it does, that it will be able to utilize its existing NOLs.

Currently, CoSine's business consists primarily of a customer service capability operated under contract by a third party.

Safe Harbor Warning

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: This release contains forward-looking statements, which include, among others, statements concerning CoSine's expected financial performance, exploration of strategic alternatives, and business outlook, expected performance and developments. The company uses words such as "anticipate," "believe," "plan," "expect," "future," "intend" and similar expressions to identify forward-looking statements. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those reflected in the forward-looking statements.

Factors that might cause such a difference include, but are not limited to, Cosine’s ability to identify and effectuate desirable strategic acquisitions, the time and costs required to explore and investigate possible transactions and other corporate actions, management and board interest in and distraction due to exploring and investigating strategic alternatives, the reactions, either positive or negative, of investors, competitors, customers, employees and others to CoSine exploring and executing possible strategic acquisitions. Readers are advised to refer to risk factors, all as may be discussed in more detail on pages 4 through 8 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2005. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management's opinions only as of the date hereof. CoSine undertakes no obligation to revise or publicly release the results of any revision to these forward-looking statements.

For additional information contact:

CoSine Communications, Inc.

Terry Gibson                         

(408) 236-7518

E-mail: Terry.Gibson@Cosinecom.com

CoSine Communications, Inc.

CONSOLIDATED STATEMENT OF OPERATIONS

(in thousands, except per share data)

	Three months ended September 30,						Nine months ended September 30,
	2006			2005			2006			2005
Revenue:
Product	$	-		$	-		$	-		$	216
Service		134			785			1,233			2,165
Total revenue		134			785			1,233			2,381
Cost of revenue		366			702			1,469			1,545
Gross profit (loss)		(232	)		83			(236	)		836
Operating expenses:
Research and development		-			-			-			103
Sales and marketing		-			-			-			105
General and administrative		295			422			906			2,825
Restructuring and impairment charges		-			-			-			(91	)
Total operating expenses		295			422			906			2,942
Loss from operations		(527	)		(339	)		(1,142	)		(2,106	)
Interest income and other		302			191			996			470
Loss before income tax benefits		(225	)		(148	)		(146	)		(1,636	)
Income tax benefits		-			(117	)		-			(94	)
Net loss	$	(225	)	$	(31	)	$	(146	)	$	(1,542	)
Basic and diluted net loss per share	$	(0.02	)	$	(0.00	)	$	(0.01	)	$	(0.15	)
Shares used in computing basic and diluted net loss per share		10,091			10,091			10,091			10,095

CoSine Communications, Inc.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

	September 30, 2006 (Unaudited)			December 31, 2005 (1)
ASSETS
Current assets:
Cash and cash equivalents	$	15,740		$	12,417
Short-term investments		7,254			10,749
Accounts receivable, trade		96			96
Other receivables		19			209
Prepaid expenses and other current assets		114			119
Total current assets		23,223			23,590
Long-term deposits		-			250
	$	23,223		$	23,840
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	412		$	237
Other accrued liabilities		210			874
Deferred revenue		87			126
Total current liabilities		709			1,237
Stockholders' equity:
Common stock		1			1
Additional paid-in capital		538,977			538,947
Accumulated other comprehensive income		658			632
Accumulated deficit		(517,122	)		(516,977	)
Total stockholders' equity		22,514			22,603
	$	23,223		$	23,840

¹ Amounts are derived from the December 31, 2005 audited financial statements.