Attached files
| file | filename |
|---|---|
| 8-K - COSINE COMMUNICATIONS INC | v195650_8k.htm |
EXHIBIT
99.1
COSINE
COMMUNICATION, INC. ANNOUNCES
PLAN
TO TERMINATE REGISTRATION OF ITS COMMON STOCK
LOS
GATOS, Calif., August 30 /PRNewswire-FirstCall/ -- CoSine Communications, Inc.
(Pink Sheets:COSN.pk - News), today announced that a special
committee consisting of all its independent directors has recommended, and its
Board of Directors has unanimously approved, a plan to deregister CoSine’s
common stock under the Securities Exchange Act of 1934, as amended, and as a
result thereof, terminate its periodic reporting obligations with the Securities
and Exchange Commission. CoSine is taking these steps to avoid the
substantial and increasing cost and expense of being an SEC reporting company
and of regulatory compliance under the Sarbanes-Oxley Act of 2002, and to focus
CoSine's resources on the redeployment of its existing assets to acquire, or
invest in, one or more operating businesses with existing or prospective taxable
income, or from which it can realize capital gains, that can be offset by use of
its net operating loss carry-forwards.
To
accomplish this, the Board of Directors is proposing to amend CoSine's
certificate of incorporation to effect a reverse stock split, which would
immediately be followed by a forward stock split. The Board of Directors has
tentatively determined a reverse split ratio of 1-for-500 shares and a forward
stock split ratio of 500-for-1. Assuming these ratios are used and subject to
stockholder approval, registered stockholders owning less than 500 shares of
common stock immediately prior to the reverse stock split will receive a cash
payment of $2.24 per share, on a pre-split basis, in lieu of owning fractional
shares and participating in the forward stock split. The reverse
stock split will be followed immediately by a 500-for-1 forward stock
split. As a result, beneficial stockholders holding shares in "street
name" through a nominee (such as a bank or a broker) and registered stockholders
owning 500 or more shares of common stock will not be impacted by the
reverse/forward stock splits and retain their current numbers of shares of
common stock without change. If, after completion of the reverse and forward
stock splits, CoSine has fewer than 300 shareholders of record, CoSine intends
to terminate the registration of its common stock under the Securities Exchange
Act of 1934, as amended. If that occurs, CoSine will be relieved of
its requirements to comply with the Sarbanes-Oxley Act of 2002 and to file
periodic reports with the SEC, including annual reports on Form 10-K and
quarterly reports on Form 10-Q. CoSine intends to continue to provide
interim unaudited financial information and annual audited financial information
to its stockholders.
The Board
of Directors has reserved the right to change the ratio of the stock splits or
to choose an alternative to the stock splits to the extent it believes necessary
or desirable in order to accomplish the goal of reducing the number of record
holders to below 300. The Board of Directors may also abandon the proposed stock
splits at any time prior to the completion of the proposed transaction if it
believes that the proposed transaction is no longer in the best interests of
CoSine or its stockholders.
The
special committee retained an independent financial advisor, Cassel Salpeter
& Co., to assist it in determining that the price of $2.24 per share on a
pre-split basis to be received by registered stockholders owning less than 500
shares of common stock is fair from a financial point of view.
All
stockholders will have a chance to vote on the proposed transaction pursuant to
proxy materials which will be filed by CoSine with the SEC in the near
future. CoSine intends to file a preliminary proxy statement and
Schedule 13E-3 with the SEC outlining the plan. All stockholders are
advised to read the definitive proxy statement and Schedule 13E-3 carefully when
these documents are available. Stockholders may obtain a free copy of
the definitive proxy statement and Schedule 13E-3 (when available) at the SEC’s
website at www.sec.gov. CoSine also will provide a copy of the
definitive proxy statement prior to the special meeting to its stockholders
entitled to vote at the special meeting.
About
Cosine Communications
CoSine
Communications was founded in 1998 as a global telecommunications equipment
supplier. As of December 31, 2006, CoSine had ceased all its product
and customer service related operations. CoSine’s strategic plan is to redeploy
its existing resources to identify and acquire, or invest in, one or more
operating businesses with the potential for generating taxable income and/or
capital gains. This strategy may allow CoSine to realize future cash flow
benefits from its net operating loss carry-forwards (“NOLs”). As of
this date, no candidates have been identified, and no assurance can be given
that CoSine will find suitable candidates, and if it does, that it will be able
to utilize its existing NOLs.
Safe
Harbor Warning
"Safe
Harbor" Statement under the Private Securities Litigation Reform Act of 1995:
This release contains forward-looking statements, which include, among others,
statements concerning CoSine's expected financial performance, exploration of
strategic alternatives, and business outlook, expected performance and
developments. The company uses words such as "anticipate," "believe," "plan,"
"expect," "future," "intend" and similar expressions to identify forward-looking
statements. These forward-looking statements are subject to certain risks and
uncertainties that could cause actual results to differ materially from those
reflected in the forward-looking statements.
Factors
that might cause such a difference include, but are not limited to, Cosine’s
ability to identify and effectuate desirable strategic acquisitions, the time
and costs required to explore and investigate possible transactions and other
corporate actions, management and board interest in and distraction due to
exploring and investigating strategic alternatives, the reactions, either
positive or negative, of investors, competitors, customers, employees and others
to CoSine exploring and executing possible strategic acquisitions. A
detailed discussion of these factors and other risks that affect CoSine's
business is contained in its SEC filings, including its most recent reports on
Form 10-K and Form 10-Q, particularly under the heading "Risk
Factors." Readers are cautioned not to place undue reliance on these
forward-looking statements, which reflect management's opinions only as of the
date hereof. CoSine undertakes no obligation to revise or publicly release the
results of any revision to these forward-looking statements.
For
additional information contact:
Terry
Gibson
(408)
399-6494
E-mail:
Terry.Gibson@Cosinecom.com