Coyote Network System's S-3 Registration Statement
No Sales By Insiders or Affiliates;
TheStreet.Com's Reporting 'Incomplete and Misleading'
WESTLAKE VILLAGE, Calif., Dec. 14 /PRNewswire/ -- Coyote Network Systems today stated that, TheStreet.Com's (TSC) representation "Coyote Insiders Register to Sell Shares" of Coyote's S-3 Registration Statement was incomplete and misleading.
No Short Sales by Insiders or Affiliates
On Coyote's recently filed S-3 Registration Statement, only three of the Company's "insiders" are registering shares underlying warrants. The total is less than 4% of the total number of shares to be registered.
TSC reaches the conclusion that Coyote's "insiders" and "affiliates" may be poising to "short sell" their stock. The Company believes that such practices are expressly prohibited by Section 16 of the Securities Exchange Act of 1934.
The warrants were issued to the insiders in a private placement in July 1997, as part of a purchase of stock that was the result of approximately $400,000 of personal funds invested in the Company by these individuals. James J. Fiedler, chairman and ceo, Anthony D. Squeglia, director investor relations and Stephen Portner, an outside director and his daughter are already in possession of freely trading Coyote shares as a result of that purchase, and have been for some time.
You Must Read the S-3 Footnotes-- They are Important!!
The Coyote S-3 clearly stated that the 200% of common shares that are being registered for JNC are required contractually, even though the actual conversion may be 1,107,594 shares. TSC notes, quoting from Coyote's S-3, that "JNC Opp. Fund will be free to sell 2.8 million shares." JNC is a preferred shareholder, which purchased its shares in a Regulation D placement in late August 1998. In quoting from the S-3, TSC failed to, or decided not to include, the footnote: "(The 2,561,096) represents shares of common stock issuable to JNC upon conversion in full of the Preferred Stock as payment of dividends thereunder and exercise in full of the JNC Warrant.
"Because the number of shares of common stock issuable upon conversion of the Preferred Stock and as payment of dividends thereon is dependent in part upon the market price of the common stock prior to a conversion, the actual number of shares of common stock that will be issued in respect of such conversions or dividend payments and, consequently, offered for sale under this Registration Statement, cannot be determined at this time. Accordingly, the Company has contractually agreed to include herein 2,561,096 shares of common stock issuable upon conversion of the Preferred Stock, payment of dividends thereunder and exercise of the JNC Warrant. This number includes 200% of the number of shares, which will be received upon conversion of the Preferred Stock at the current $6.32 exercise price in effect on December 3, 1998. However, if the share price (as defined in the Certificate of Designation governing the Preferred Stock) of the Company common stock is above $7.50 at the time of conversions, the actual number of shares to be issued upon the eventual conversion of all of the JNC Preferred Stock would not exceed 1,107,594 shares."
In addition, the Preferred Stock is not convertible into common stock until January 1999. In the event the conversion price drops below $5.50 per share, the Company has various alternatives to conversion, including the right to redeem by purchasing the Preferred Stock for cash or making cash payments in lieu of the conversion of shares.
Comdisco and Crescent Communications - One More Time!!
Coyote sold communications equipment to Comdisco. Comdisco paid Coyote $12 million prior to shipping the equipment. Coyote passed title to the equipment to Comdisco before shipping the equipment. Comdisco provided the lease financing to Crescent Communications. The financial accounting for this transaction was approved by the Company's Audit Committee, the Chief Financial Officer and the Company's Officers.
About Coyote Network Systems
Headquartered in Westlake Village, CA, Coyote Network Systems (CNS) provides telecom equipment, international and domestic long distance services, and "backroom" operations and support to carriers and affinity-based groups. Coyote Technologies provides scalable Class 4/5 and Internet Protocol gateway switches. 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, primarily to affinity groups. CNS is authorized to provide competitive local exchange carrier (CLEC) services in the State of California. For more information, please visit the Company's Web site: cyoe.com.
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.
SOURCE Coyote Network Systems
CO: Coyote Network Systems; TheStreet.Com
ST: California
IN: TLS CPR
SU:
12/14/98 08:56 EST prnewswire.com |
