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COSN - COSINE COMMUNICATIONS, INC. 12 years 1 month ago #1249

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LOS GATOS, CA. September 4, 2007 - CoSine Communications, Inc. (COSN.PK) today announced that it amended its share purchase rights plan, dated September 1, 2005, which provided for a dividend distribution of one preferred share purchase right for each outstanding share of CoSine’s common stock, paid on September 12, 2005 to CoSine’s stockholders of record at the close of business on that date. The amendment extends the expiration date of the rights from September 1, 2007 until September 1, 2009, unless earlier redeemed, exchanged, or amended by the Board of Directors. The amendment was not made in response to any pending takeover bid for CoSine. The primary purpose of the plan is to preserve CoSine’s existing and projected net operating losses, or “NOLs,” for tax purposes. Under the Internal Revenue Code and rules promulgated by the Internal Revenue Service, CoSine can carry forward these NOLs in certain circumstances to offset current and future earnings, and thus reduce its federal income tax liability (subject to certain requirements and restrictions). CoSine’s future use of these NOLs could be substantially limited or lost altogether, however, in the event of an “ownership change,” as defined under Section 382 of the Internal Revenue Code.

On November 15, 2005, CoSine stockholders approved an amendment to CoSine’s Second Amended and Restated Certificate of Incorporation restricting direct and indirect acquisitions of CoSine capital stock (or options, warrants or other rights to acquire CoSine’s capital stock, or securities convertible or exchangeable into CoSine capital stock) if such acquisition would affect the percentage of CoSine’s capital stock that is treated as owned by a “5% stockholder.”

As of June 30, 2007, CoSine had NOLs of approximately $342 million to offset against future taxable income. The amount of NOLs has not been audited or otherwise validated by the U.S. Internal Revenue Service and could challenged by the U.S. Internal Revenue Service. No assurance can be given that CoSine will be able to utilize its existing NOLs.
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