8-K

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): March 17, 2010

SOAPSTONE NETWORKS INC.

(Exact name of registrant as specified in its charter)

Delaware

(State of incorporation or organization)

000-30865	02-0493372
(Commission file number)	(I.R.S. employer identification no.)

15 New England Executive Park, Burlington, MA 01803

(Address of principal executive office) (Zip code)

Registrant’s telephone number, including area code: (978) 987-9304

One Federal Street, Billerica, MA 01821

(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:

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

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

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

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

Item 8.01 Other Events

Future Filings with the Securities and Exchange Commission

On March 17, 2010, Soapstone Networks Inc. (the “Company”) issued a press release regarding its Board of Directors (the “Board”) decision not to file an Annual Report on Form 10-K for the fiscal year ended December 31, 2009 and its intention not to file Quarterly Reports on Form 10-Q or Annual Reports on Form 10-K with the Securities and Exchange Commission for any future periods. The Company’s press release, which also sets forth the Board’s reasons for such decisions, is furnished as Exhibit 99.1 to this report.

Delaware Petition for Liquidating Distribution

The Company has petitioned the Delaware Chancery Court (the “Court”) to allow the Company to make a liquidating distribution of $.76 per share to the Company’s stockholders of record as of July 31, 2009. In the petition, the Company has also requested the Court to approve that the remainder of its assets, currently $0.7 million, be retained by the Company to pay its ongoing liquidation expenses over the more than two years remaining in the dissolution process. As of the date of this filing, the Court has not yet acted on the Company’s petition, and there can be no assurance that any such action will be made quickly or in favor of the Company’s petition.

Statement of Changes in Net Assets and Statement of Net Assets

At the Company’s annual meeting of stockholders on July 28, 2009, stockholders voted to approve the liquidation and dissolution of the Company pursuant to the Plan of Liquidation and Dissolution (the “Plan of Liquidation”), which authorized the filing of a certificate of dissolution that was filed with the Secretary of State of the State of Delaware on July 31, 2009. In connection with the approval of the Plan of Liquidation and the filing of the Plan of Liquidation with the Secretary of State of the State of Delaware on July 31, 2009, the Company adopted a liquidation basis of accounting effective August 1, 2009. Today, the Company reported on its financial condition as of December 31, 2009, which is updated from the Company’s last financial statements as of September 30, 2009, which were filed with the Securities and Exchange Commission on a Form 10-Q on November 12, 2009.

SOAPSTONE NETWORKS INC.

CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS (LIQUIDATION BASIS)

FOR THE PERIOD OCTOBER 1, 2009 TO DECEMBER 31, 2009

(IN THOUSANDS)

(unaudited)

Net Assets (liquidation basis) as of September 30, 2009	$	11,412
Other income (includes interest income)		6
Change in estimated net realizable value of assets and liabilities		246
Net Assets (liquidation basis) as of December 31, 2009	$	11,664

See accompanying notes.

SOAPSTONE NETWORKS INC.

CONSOLIDATED STATEMENT OF NET ASSETS AS OF DECEMBER 31, 2009 (LIQUIDATION BASIS)

(IN THOUSANDS)

(unaudited)

	December 31, 2009
ASSETS
Cash and cash equivalents	$	15,855
Other assets		—
Total assets	$	15,855
LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts payable	$	—
Reserve for estimated costs during the liquidation period		4,191
Total liabilities	$	4,191
Net assets (liquidation basis-available to common stockholders)	$	11,664

See accompanying notes.

FOOTNOTES

NOTE 1. BASIS OF PRESENTATION

The unaudited financial information included herein has been prepared by Soapstone Networks Inc., and includes the accounts of Soapstone Networks Inc. and its subsidiaries (“Soapstone” or the “Company”). In the opinion of the Company, the accompanying financial information reflects all adjustments necessary for a fair presentation of its net assets in liquidation as of December 31, 2009 and the changes in net assets presented herein.

Any material subsequent events have been considered for disclosure and recognition through the filing date of this Form 8-K, March 17, 2010.

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Liquidation Basis of Accounting

The Company’s Statement of Net Assets in Liquidation and Statement of Changes in Net Assets in Liquidation are the principal statements of financial condition presented under the liquidation basis of accounting. Under the liquidation basis of accounting, the Company’s assets are stated at their estimated net realizable value, which is the non-discounted amount of cash, or its equivalent, into which an asset is expected to be converted in the due course of business less direct costs, while the Company’s liabilities are reported at their estimated settlement amount, which is the non-discounted amounts of cash, or its equivalent, expected to be paid to liquidate an obligation in the due course of business, including direct costs. Additionally, under the liquidation basis of accounting, the Company is required to establish a reserve for all future estimated general and administrative expenses and other costs expected to be incurred during the liquidation. The reserve for these estimated expenses includes primarily accruals including facilities, professional services, litigation costs, and corporate expenses, which includes insurance, directors’ fees and statutory fees. These estimates will be periodically reviewed and adjusted as appropriate. There can be no assurance that these estimated values will be realized. Such amounts should not be taken as an indication of the timing or amount of future distributions or the Company’s actual dissolution. The valuation of assets at their net realizable value and liabilities at their anticipated settlement amount represent estimates, based on present facts and circumstances, of the net realizable value of the assets and the costs associated with carrying out the Plan of Liquidation. The actual values and costs associated with carrying out the Plan of Liquidation are expected to differ from amounts reflected in the accompanying statements of financial condition because of the plan’s inherent uncertainty. These differences may be material. In particular, the estimates of the Company’s costs will vary with the length of time necessary to complete the Plan of Liquidation. Accordingly, it is not possible to predict with certainty the timing or aggregate amount which will ultimately be distributed to stockholders and no assurance can be given that the distributions will equal or exceed the estimate presented in the accompanying Statement of Net Assets.

The Company was required to make significant estimates and exercise judgment in determining the accrued costs of liquidation at December 31, 2009. The Company accrued the following costs expected to be incurred in liquidation:

Accrued Costs of Liquidation	Amount
Contractual commitment	$	3,500
Outside services and other wind down expenses		691
	$	4,191

The contractual commitment accrued at December 31, 2009 is for the lease dated April 2, 2008 by and between the Company and RREEF AMERICA REIT III-Z1 LLC (the “Landlord”), for the building at 1 Federal Street Billerica, Massachusetts 01821 (the “Lease Agreement”). On January 5, 2010, the Company and the Landlord entered into a Lease Termination Agreement (the “Termination”) whereby the parties terminated the Lease Agreement in exchange for a Company payment to the Landlord of $3.5 million, after which the Company had no further obligations under the Lease Agreement.

(b) Change in Estimated Net Realizable Value of Assets and Liabilities

The change of $0.2 million consists of additional estimated wind-down expenses offset by a decrease in the estimated reserve held to make payments to terminate the Company’s lease obligation.

(c) Cash and Cash Equivalents and Marketable Securities

The Company has classified its marketable securities as held-to-maturity and recorded them at amortized cost, which approximates market value. Funds from marketable securities designated as held-to-maturity are not available for immediate use. The Company considers all highly liquid investments with original maturities of three months or less at the date of acquisition to be cash equivalents. Cash and cash equivalents include money market funds and certificates of deposit.

Cash, cash equivalents and marketable securities consist of the following:

	December 31, 2009		December 31, 2008
Cash and cash equivalents	$	15,855	$	83,124
Marketable securities		—		6,042
Total	$	15,855	$	89,166

(d) Use of Estimates

The preparation of this financial information requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial information and the reported amounts expenses during the stated periods. Significant estimates include anticipated amounts and timing of future cash flows used in the calculation of net realizable value, reserve for future costs and settlement amounts. Actual results could differ from those estimates.

Item 9.01. Financial Statements and Exhibits

(d) Exhibits

99.1 Press Release, dated March 17, 2010

Cautionary Statement About Forward-Looking Statements

This Current Report on Form 8-K contains “forward-looking statements” about Soapstone Networks’ future expectations, expenses and plans that constitute forward-looking statements for purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ materially from those anticipated. When used in this Current Report on Form 8-K, the word “will”, “expected” and other similar expressions are intended to identify such forward looking statements. Further information on potential risk factors that could affect Soapstone, its liquidation and its cash holdings are set forth in the Company’s previous filings with the Securities and Exchange Commission. The Company does not undertake any duty to update forward-looking statements.

SIGNATURE

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

	SOAPSTONE NETWORKS INC.
Date: March 17, 2010	By:	/s/    WILLIAM J. STUART
		William J. Stuart
		President

EX-99.1

Exhibit 99.1

Soapstone Networks Inc. Files Form 8-K Disclosing Financial Condition

and Announces Decision Not to File 2009 Annual Report on Form 10-K

March 17, 2010 — Soapstone Networks Inc. (“Soapstone”) (trading symbol: SOAP.PK), announced today that it has filed a Form 8-K with the Securities and Exchange Commission which discloses its financial condition as of December 31, 2009. Soapstone’s Board of Directors has determined not to file an Annual Report on Form 10-K for the fiscal year ended December 31, 2009 because that filing would primarily report on Soapstone’s operations prior to Soapstone’s adoption of a Plan of Liquidation and Dissolution, which was effective as of July 31, 2009. Additionally, Soapstone today announced that its Board of Directors has also determined not to file Quarterly Reports on Form 10-Q or Annual Reports on Form 10-K for any future periods.

Soapstone’s Board of Directors determined not to make these filings after careful consideration of Soapstone’s current circumstances, including the fact that Soapstone is no longer engaged in any active business or operations and no longer has any employees. Soapstone is dissolving in accordance with the requirements of the Delaware General Corporation Law and pursuant to a Plan of Liquidation and Dissolution previously disclosed in Soapstone’s proxy statement filed with the Securities and Exchange Commission on July 2, 2009 and approved by Soapstone’s stockholders at an annual meeting held on July 28, 2009. Soapstone’s Board of Directors also carefully considered the fact that continuing to make these filings would require Soapstone to incur considerable expense (in the form of legal, accounting, consulting and other professional fees), thereby reducing the amounts that may ultimately be distributable to Soapstone’s stockholders in the future.

In coming to these decisions, Soapstone’s Board of Directors was particularly focused on maximizing the amount that Soapstone will ultimately have available for distribution to its stockholders, as well as the fact that neither an Annual Report on Form 10-K for the fiscal year ended December 31, 2009, nor future quarterly or annual report filings would provide meaningful information to Soapstone’s stockholders or the investing public that could not be provided via alternative, less expensive methods.

To that end, Soapstone intends to continue to file Current Reports on Form 8-K upon the occurrence of any event that is material to Soapstone, including the making of any distribution payment to stockholders or the final dissolution of Soapstone. In addition, in lieu of filing an Annual Report on Form 10-K for the fiscal year ended December 31, 2009 or making future quarterly or annual report filings, Soapstone intends to file Current Reports on Form 8-K following the conclusion of each fiscal quarter that will contain statements of Soapstone’s Net Assets and Changes in Net Assets as of the last day of such fiscal quarter, which statements will be prepared by Soapstone. After today’s Form 8-K filing, Soapstone intends to continue to make similar filings within 40 days after the end of each subsequent fiscal quarter until Soapstone’s dissolution is complete.

Cautionary Statement About Forward-Looking Statements

This press release contains “forward-looking statements” about Soapstone’s future expectations, expenses and plans that constitute forward-looking statements for purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ materially from those anticipated. When used in this press release, the word “will”, “expected” and other similar expressions are intended to identify

such forward looking statements. Further information on potential risk factors that could affect Soapstone, its liquidation and its cash holdings are set forth in Soapstone’s previous filings with the Securities and Exchange Commission. Soapstone does not undertake any duty to update forward-looking statements.

Contact:

Soapstone Networks Inc.

Michael Cayer, (978) 987-9304