1060824--3/23/2007--COSINE_COMMUNICATIONS

related topics

{interest, director, officer}

{acquisition, growth, future}

{control, financial, internal}

{tax, income, asset}

{stock, price, share}

{property, intellectual, protect}

{customer, product, revenue}

{investment, property, distribution}

{product, liability, claim}

We have sold our operating assets, our patent portfolio and our intellectual property and are executing a redeployment strategy. There can be no assurance that the redeployment strategy will increase shareholder value, and we may decide to liquidate. Failure to execute our redeployment strategy could cause our stock price to decline. We will incur significant costs in connection with our evaluation of suitable acquisition candidates. We will likely have no operating history in our new line of business, which is yet to be determined, and therefore we will be subject to the risks inherent in establishing a new business. We may be unable to realize the benefits of our net operating loss carry-forwards ("NOLs"). Certain transfer restrictions implemented by us to preserve our net operating loss carryforwards may not be effective or may have some unintended negative effects. We could be required to register as an investment company under the Investment Company Act of 1940, which could significantly limit our ability to operate and acquire an established business. We may issue a substantial amount of our common stock in the future which could cause dilution to new investors and otherwise adversely affect our stock price. Our customers may sue us because we discontinued our products and may not meet all our contractual commitments. If our products contain defects, we may be subject to significant liability claims from customers, distribution partners and the end-users of our products and incur significant unexpected expenses and lost sales. If we became involved in an intellectual property dispute, we could be subject to significant liability, the time and attention of our management could be diverted from pursuing strategic alternatives. We have a history of losses that we expect will continue, and if we do not achieve profitability we may cease operations. If we cannot obtain director and officer liability insurance in acceptable amounts for acceptable rates, we may have difficulty recruiting and retaining qualified directors and officers.

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1060824--3/23/2007--COSINE_COMMUNICATIONS_INC