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Strategies & Market Trends : Anthony @ Equity Investigations, Dear Anthony, -- Ignore unavailable to you. Want to Upgrade?

To: AD who wrote (31003)	4/17/1999 3:55:00 PM
From: StockDung	Read Replies (1) \| Respond to of 122087

"Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement." REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Board of Directors and Shareholdersof Coyote Network Systems, Inc. We have audited the accompanying consolidated balance sheet of Coyote Network Systems, Inc. (formerly, The Diana Corporation) and subsidiaries as of March 31, 1998, and the related consolidated statements of operations, shareholders' equity and cash flows for the year then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. As discussed in Notes 1 and 2 of the notes to the consolidated financial statements, the Company has substantially completed its major restructuring plan which has resulted in Coyote Technologies, LLC becoming the primary operating company. As further discussed in Note 6, the Company is the defendant in various lawsuits asserting claims under Section 10(b) of the Securities Exchange Act of 1934. On July 9, 1998, the respective counsel for the plaintiffs and for the Company executed a letter agreeing in principle, subject to various conditions and contingencies, to settle the claims against the Company to issue warrants to acquire 2,500,000 shares of the Company's common stock. The estimated value of the warrants ($8,000,000) has been provided for in the financial statements as of March 31, 1998. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Coyote Network Systems, inc. and subsidiaries as of March 31, 1998, and the results of their operations and their cash flows for the year then ended in conformity with generally accepted accounting principles.ARTHUR ANDERSEN LLPLos Angeles, CaliforniaJuly 13, 1998