Coyote Networks Systems apparently received some negative press from TheStreet.Com. Coyote halted trading at one point today. It issued 2 press releases, the second of which noted its use of Newbridge equipment in a transaction apparently criticized by TSC (I've not yet read TSC's article). There is nothing negative here about NN, but the stink by association may, perhaps, have had some effect.
Press Release 1:
Thursday December 10, 8:22 am Eastern Time
Company Press Release
SOURCE: Coyote Network Systems, Inc.
Coyote Network Systems Refutes TheStreet.com's 'Misleading' Release
Crescent Has Letters of Intent for 30 Million International Minutes Per Month; Coyote 'Insiders' Have Not Sold a Single Share and Have No Intention to Sell
WESTLAKE VILLAGE, Calif., Dec. 10 /PRNewswire/ -- Coyote Network Systems, Inc. (Nasdaq: CYOE - news) today said the accusations made yesterday in articles by a reporter from TheStreet.Com (TSC) about Coyote Network Systems and Crescent Communications are potentially misleading.
The facts are as follows:
* A significant portion of Coyote's second quarter revenue consisted of an
equipment sale to Comdisco, which then leased the equipment to Crescent
Communications, an emerging international carrier. Coyote received full
cash payment from Comdisco upon shipment of the equipment. As earlier
reported, the equipment consisted of Coyote's DSS Switches and
compression equipment from another manufacturer.
* Crescent Communications has Letters of Intent or firm commitments for
more than 30 million minutes per month to international locations. As
quoted in Kaufman Brothers Intraday Note published yesterday, "Crescent
Communications is indeed incorporated in Nevada but is based in Long
Beach (CA)," and has the necessary licenses and tax identifications.
* Crescent Communications was the subject of extensive due diligence by
Coyote. Likewise, Crescent Communications also was the subject of due
diligence by Comdisco. Comdisco purchased the communications equipment
from Coyote and leased it to Crescent Communications.
''We did extensive due diligence on Crescent,'' said Daniel W. Latham, president and chief operating officer, Coyote Network Systems. ''We have been working closely and have been in constant communications with Crescent for the last three months working on site surveys, project management and network design, regarding Crescent's international carrier services. Our sale of the equipment to Comdisco was on a non-recourse basis with amounts reserved for service contingencies, all of which was reflected in our second quarter financial reporting.''
The TSC reporter also referenced Coyote's S-3 Registration Statement filed last week. The Registration Statement had two employees and one board member (''its insiders'') included, whose total was less than 4% of the shares to be registered. These same ''insiders'' have owned more than twice that number of shares since approximately July 1997 and have neither sold nor plan to sell a single share. The reference in the S-3 to ''short selling'' related only to the possibility of ''short sales'' under the Plan of Distribution for the JNC Series ''A'' Preferred Shares. Coyote's ''insiders'' and ''affiliates'' can not and will not ''short sell'' Coyote stock.
Given the nature and gravity of the situation, Coyote Network Systems and Crescent Communications are hopeful that TSC will correct the articles with complete and accurate statements. ''Coyote is confident about its business, proud of its customers and vendors and will do all in its power to refute such misleading information,'' said Latham.
About Coyote Network Systems
Headquartered in Westlake Village, CA, Coyote Network Systems (CNS) provides telecom equipment and network services that enable and deliver local, long distance and Internet services. Coyote Technologies provides scalable Class 4/5 telecom switches and IP (Internet Protocol) gateway systems. Headquartered in Houston, TX, American Gateway Telecommunications provides international long distance services to carriers. Headquartered in Los Angeles, CA, Interactive Network Systems markets international long distance services to affinity groups. CNS is authorized to provide competitive local exchange carrier (CLEC) services in California. For more information, please visit the Company's Web site: cyoe.com, or call 1-818-735-5385.
The statements in this news release may be considered ''forward looking statements'' within the meaning of the Private Securities Litigation Reform Act of 1995 and involve known and unknown risks and uncertainties, which may cause the Company's actual results in future periods to be materially different from any future performance suggested in this news release. Readers are cautioned not to place undue reliance on these forward-looking statements that speak only as of the date hereof. For more complete information, please refer to the Company's Form 10-K and Form 10-Q filings with the SEC.
Press Release 2:
-- As reported earlier, Comdisco, one of the world's leading providers of
lease financing, provided the lease financing for the initial portion
of the equipment contract for Crescent. Title for the equipment was
passed to Comdisco, who paid Coyote prior to the equipment being
shipped. Comdisco paid Coyote $12 million for the communications
equipment shipped in the initial order, which included three of
Coyote's DSS Switches and compression equipment manufactured by
Newbridge Networks. The total equipment order is $28 million. In
addition, $9 million is to be paid over a three-year period by Crescent
to Coyote for services, which include network design, diagnostic
engineering, maintenance, billing, and network operations and support.
No date has yet been established for the next phase of equipment, and,
consequently, no financing for that phase is in place.
-- Crescent Communications is an emerging international carrier that fits
Coyote's strategy to make investment in and/or partner with carriers
that are strategically aligned with Coyote's goal to enable and deliver
voice, data and video solutions. Coyote provides the switching
technology, and back room, operations, service and support. Crescent
provides the sales and marketing and has letters of intent for more
than 30 million minutes of international traffic.
-- Gene Curcio, president, Crescent Communications, has been in the
telecom business for 17 years. Crescent Communications is a privately
held company, incorporated in Nevada with a mailing address at One
World Trade Center, Long Beach, CA, 90832-32272. Mr. Curcio's
answering service can be reached at 310-543-3859; his fax number is
310-544-1387. Mr. Curcio would prefer to receive e-mail inquiries
@ curcio1@gte.net.
-- Title for the communications equipment for Crescent was passed to
Comdisco and the equipment was paid for prior to shipping to San
Antonio, TX, for staging, i.e., integration of switching equipment and
compression equipment. The communications equipment is currently
enroute to a telecom co-location site in Plano, TX, for installation,
which will begin on December 15 and is expected to be completed in
January. Some of the Newbridge Networks equipment will be installed in
Mexico in January.
''Crescent is young, aggressive, marketing-oriented and entrepreneurial,'' said Daniel W. Latham, president and chief operating officer, Coyote Network Systems. ''They gain contracts, letters of intent or commitments for long distance minutes because they have the business acumen and contacts to make the sale, however, companies like Crescent may need assistance with financing and the technical aspects of turning-up and maintaining a network. This is the expertise Coyote provides-right out of our strategic plan. Crescent is currently a switchless reseller migrating to switch-based status.
''In today's market, long distance resellers who simply lease lines are experiencing a major squeeze between competitive end-user rates and line lease costs. Establishing their own network enables them to significantly increase their margins. But day-to-day, backroom operations are rarely their forte,'' stated Latham.
''When these stories broke, Gene Curcio and I spent time on the phone to get this situation straightened out. Mr. Curcio said that he has answered a number of calls from investors and can't understand why he is so hard to find by TheStreet.Com, however, Mr. Curcio indicated that he spoke with TSC this morning,'' Latham concluded. |
