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Technology Stocks : Coyote Network Systems (CYOE), Mixing It Up, IP and ATM
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To: Bruce A. Thompson who wrote (122)2/18/1999 7:08:00 PM
From: Q.  Read Replies (2) of 360
 
There must be more to this loan than indicated in this announcement.

Banks look for cash flow to cover loan payments and assets to collateralize. The cash flow simply isn't there in the latest financial statements. There is simply no way that a bank would give them this kind of loan for general corporate purposes.

In the past CYOE has used gimmicky financing tactics, such as issuing stock and warrants to a third party (Comdisco) in order to have the third party take the risk of financing a sale of equipment to an untrustworthy customer. There might be a gimmick in here, too.

The language of the announcement says they didn't issue warrants and that the loan is not convertible into common stock. But there must be something else to compensate the financier for the risk. Perhaps they simply issued some shares to the lender? Maybe they got a third party (like Comdisco) to guarantee the loan by issuing more shares to the third party?
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