================================================================================

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                    ----------------------------------------

                                   FORM 10-Q/A
                                 Amendment No. 1


         |X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                For the quarterly period ended December 31, 1999

                                       OR

         |_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

            For the transition period from ___________ to ___________

                    ----------------------------------------

                         Commission file number: 1-5486


                          COYOTE NETWORK SYSTEMS, INC.
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)

                Delaware                                 36-2448698
    -------------------------------          ----------------------------------
    (State or other jurisdiction of         (I.R.S. Employer Identification No.)
    incorporation or organization)

               4360 Park Terrace Drive, Westlake Village, CA 91361
             ------------------------------------------------------
               (Address of principal executive offices) (Zip Code)

                                 (818) 735-7600
             ------------------------------------------------------
              (Registrant's telephone number, including area code)

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed  by  Section  13 or 15 (d) of the  Securities  Exchange  Act of 1934
during the preceding 12 months (or for such shorter  period that the  Registrant
was  required  to file such  reports),  and (2) has been  subject to such filing
requirements for the past 90 days. |X| YES |_| NO


At May 26, 2000, the Registrant had issued and  outstanding an aggregate of
17,426,001 shares of its common stock.

================================================================================
<PAGE>
                          COYOTE NETWORK SYSTEMS, INC.

                                AND SUBSIDIARIES

                                                                           Page
                                                                           ----
PART I.  FINANCIAL INFORMATION

         Item 1. Financial Statements


                 Balance Sheets..............................................  1
                 Statement of Operations.....................................  2
                 Statement of Cash Flows.....................................  3
                 Notes to Financial Statements...............................  4

         Item 2. Management's Discussion and Analysis of Financial Condition
                   and Results of Operations................................. 10

         Item 3. Quantitative and Qualitative Disclosures About Market Risk.. 14



PART II. OTHER INFORMATION


         Item 2.  Changes in Securities and Use of Proceeds.................  16
         Item 6.  Exhibits and Reports on Form 8-K..........................  16
         Signatures ........................................................  17



<PAGE>
                         PART I - FINANCIAL INFORMATION
                         ------------------------------
   ITEM 1.        FINANCIAL STATEMENTS

                  COYOTE NETWORK SYSTEMS, INC. AND SUBSIDIARIES
                      Condensed Consolidated Balance Sheets
                  (Dollars in Thousands, Except Share Amounts)
<TABLE>
<CAPTION>
                                                                                  December 31,          March 31,
                                                                                      1999                1999
                                                                                 ----------------      ----------
                                         Assets                                   (Unaudited)
   Current assets:

<S>                                                                                <C>                 <C>
        Cash and cash equivalents                                                  $     613           $   1,225
        Receivables net of allowance of $137 at December 31, 1999
            and $186 at March 31, 1999                                                 3,400               2,502
        Notes receivable - current                                                        12               2,367
        Net current assets of discontinued operations                                    392                ---
        Other current assets                                                           1,734               4,035
                                                                                   ---------           ---------
            Total current assets                                                       6,151              10,129

   Property and equipment, net                                                         4,016               4,807
   Intangible assets, net                                                              5,075               5,619
   Net long term assets of discontinued operations                                     4,598               5,312
   Notes receivable - non-current                                                        126                 771
   Investments                                                                         1,592               1,550
   Other assets                                                                          545                 619
                                                                                   ---------           ---------
                                                                                   $  22,103           $  28,807
                                                                                   =========           =========

                            Liabilities and Shareholders' Equity

   Current liabilities:

        Lines of credit                                                            $   1,414           $   1,133
        Accounts payable                                                               4,635               2,885

        Accrued professional fees and litigation costs                                   158                 676
        Other accrued liabilities                                                      1,245                 384

        Current portion of long-term debt and capital lease obligations                3,039               1,160
        Net current liabilities of discontinued operations                               ---               4,550
                                                                                   ---------           ---------
            Total current liabilities                                                 10,491              10,788

   Notes payable                                                                         ---               8,183
   Long-term debt                                                                      1,464               1,534
   Capital lease obligations                                                           1,634               1,817
   Other liabilities                                                                     368                 428
   Commitments and contingencies


   Shareholders' equity:
        Preferred stock - $.01 par value:  authorized 5,000,000 shares;

          issued 590 and 700 shares, liquidation preference of $10,000 per share       5,900               7,395
        Common stock - $1 par value.  Authorized 30,000,000 shares,
            issued 14,495,236 and 11,167,456 shares                                   14,495              11,167
        Additional paid-in capital                                                   117,981             109,254
        Accumulated deficit                                                         (124,473)           (116,002)
        Treasury stock at cost                                                        (5,757)             (5,757)
                                                                                   ----------          ----------
            Total shareholders' equity                                                 8,146               6,057
                                                                                   ---------           ---------
                                                                                   $  22,103           $  28,807
                                                                                   =========           =========

</TABLE>

            See notes to condensed consolidated financial statements.

                                       1
<PAGE>
                  COYOTE NETWORK SYSTEMS, INC. AND SUBSIDIARIES

                 Condensed Consolidated Statements of Operations
                                   (Unaudited)

                    (In Thousands, Except Per Share Amounts)

<TABLE>
<CAPTION>
                                                                             3 Months Ended          9 Months Ended
                                                                        ----------------------    ---------------------
                                                                         Dec. 31,    Dec. 31,      Dec. 31,    Dec. 31,
                                                                           1999        1998         1999         1998
                                                                        ----------  ----------    ---------    --------

<S>                                                                     <C>          <C>          <C>          <C>
  Net sales                                                             $  2,858     $ 3,783      $  7,166     $ 4,632
  Cost of sales                                                            2,578       3,481         6,090       4,533
                                                                        --------     -------      --------     -------
  Gross profit                                                               280         302         1,076          99
  Selling and administrative expenses                                      1,813       2,668         6,771       4,784
                                                                        --------     -------      --------     -------
  Operating loss                                                          (1,533)     (2,366)       (5,695)     (4,685)
  Interest expense                                                          (420)       (221)       (1,100)       (263)
  Non-operating income (expense):
           Gain on sale of AGT                                              ---         ---          6,209        ---
           Other                                                              24         (17)          207        (268)
                                                                        --------     --------     --------     --------
                                                                              24         (17)        6,416        (268)
                                                                        --------     --------     --------     --------
  Loss from continuing operations                                         (1,929)     (2,604)         (379)     (5,216)
  Loss from discontinued operations                                       (3,113)     (1,502)       (7,866)     (1,318)
                                                                        ---------    --------     ---------    --------
           Net loss                                                     $ (5,042)    $(4,106)     $ (8,245)    $(6,534)
                                                                        =========    ========     =========    ========

  Loss per common share (basic & diluted):

           Continuing operations                                        $   (.15)    $  (.34)     $   (.05)    $  (.66)
           Discontinued operations                                          (.24)       (.15)         (.64)       (.14)
                                                                        ---------    --------     ---------    --------
           Net loss per common share (basic & diluted)                  $   (.39)    $  (.49)     $   (.69)    $  (.80)
                                                                        =========    ========     =========    ========

  Weighted average number of common shares outstanding (basic & diluted)  13,257      10,216        12,308       9,604
                                                                        ========     =======      ========     =======
</TABLE>






            See notes to condensed consolidated financial statements.


                                       2
<PAGE>

                  COYOTE NETWORK SYSTEMS, INC. AND SUBSIDIARIES

                 Condensed Consolidated Statements of Cash Flows
                                   (Unaudited)
                                 (In Thousands)

<TABLE>
<CAPTION>
                                                                                           9 MONTHS ENDED
                                                                                  --------------------------------
                                                                                   December 31,       December 31,

Operating activities:                                                                  1999              1998
                                                                                  -------------       ----------
<S>                                                                                 <C>               <C>
     Net loss                                                                       $ (8,245)         $ (6,534)

Adjustments to reconcile loss to net cash provided (used)
  by  operating activities:

     Depreciation and amortization                                                       964               439
     Gain on sale of land                                                               ---                (20)
     Gain on sale of AGT                                                              (6,209)             ---
     Provision for loss on discontinued operations                                       314               900
     Provision for common stock warrants issued                                          975              ---
     Net change in discontinued operations                                            (4,190)            2,928
     Changes in current assets and liabilities                                         3,215            (1,332)
                                                                                    --------          ---------
Net cash used by operating activities                                                (13,176)           (3,619)
                                                                                    ---------         ---------


Investing activities:

     Purchases of property and equipment                                              (1,038)             (637)
     Proceeds from sales of marketable securities                                       ---                 16
     Proceeds from sale of land                                                         ---                 67
     Change in notes receivable                                                          (43)              270
     Increase in investments in affiliate                                               (425)             (400)
     Cash investment in INET                                                            ---             (1,333)
     Net change in discontinued operations                                              (353)           (2,808)
                                                                                    ---------         ---------

Net cash used by investing activities                                                 (1,859)           (4,825)
                                                                                    ---------         ---------
Financing activities:

     Repayments of long-term debt and capital lease obligations                          (70)             (142)
     Common stock issued net of expenses                                              13,582               752
     Redemption of preferred stock                                                    (4,000)             ---
     Increase in notes payable                                                         4,856              ---
     Increase in borrowing on line of credit                                             281              ---
     Preference shares dividend                                                         (226)             (117)
     Preference stock issued net of expenses                                            ---              6,345
                                                                                    --------          --------
Net cash provided by financing activities                                             14,423             6,838
                                                                                    --------          --------
Decrease in cash and cash equivalents                                                   (612)           (1,606)


Cash and cash equivalents:
     At beginning of the period                                                        1,225             3,746
                                                                                    --------          --------
     At end of the period                                                           $    613          $  2,140
                                                                                    ========          ========

Non-cash transactions:

     Issuance of common stock warrants                                              $    975          $    485
     Conversion of Class B Units into common stock                                       606              ---
     Conversion of convertible Preferred Stock and interest into
         common stock                                                                    103             3,407
     Discount granted for investment in affiliate                                       ---                900
     Gain on sale of AGT                                                               6,209              ---
     Notes receivable off-set against trade payables                                   1,093              ---
     Beneficial conversion feature on preference shares                                 ---              1,050

</TABLE>

            See notes to condensed consolidated financial statements


                                       3
<PAGE>

                  COYOTE NETWORK SYSTEMS, INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

NOTE 1   BASIS OF PRESENTATION
--------------------------------------------------------------------------------

The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial  information and with the  instructions to Form 10-Q and Article 10 of
Regulation  S-X.  Accordingly,  they do not include all of the  information  and
footnotes  required by generally  accepted  accounting  principles  for complete
financial statements. In the opinion of management,  all adjustments (consisting
of normal recurring accruals)  considered necessary for a fair presentation have
been  included.  Certain prior year balances have been changed to conform to the
current  period  presentation.  Operating  results for the three and nine months
ended December 31, 1999, are not necessarily  indicative of the results that may
be expected for the fiscal year ending March 31, 2000. For further  information,
refer to the consolidated financial statements and footnotes thereto included in
the  Company's  annual report on Form 10-K/A for the fiscal year ended March 31,
1999.


NOTE 2   DISCONTINUANCE OF SWITCH BUSINESS

--------------------------------------------------------------------------------

In May 2000, the Board of Directors of the Company approved a restructuring plan
that provides for the  discontinuance  and disposal of the DSS Switch segment of
the business,  which includes Coyote  Technologies,  LLC, Coyote  Communications
Services,  LLC and  TelecomAlliance.  As a result,  the Company has reported the
operations of the DSS Switch business  separately as discontinued  operations in
the  accompanying  consolidated  statement  of  operations.  Also the assets and
liabilities  of this segment are  presented  separately  and  summarized  in the
accompanying consolidated balance sheets as follows (dollars in thousands):


<TABLE>
<CAPTION>
                                                                   December 31, 1999     March 31, 1999
                                                                   -----------------     --------------

                                                                      (Unaudited)
  Current assets:
<S>                                                                     <C>                  <C>
       Accounts receivable                                              $ 16,576             $  9,790
       Inventory                                                           2,249                2,130
       Prepaids and other current assets                                     192                  286
                                                                        --------             --------
                                                                        $ 19,017             $ 12,206
                                                                        --------             --------
  Current liabilities:
       Accounts payable                                                    3,268             $  5,275
       Other accrued liabilities                                           3,121                3,515
       Deferred revenue and customer deposits                             12,236                7,810
       Current portion capital leases                                       --                    156
                                                                        --------             --------
                                                                        $ 18,625             $ 16,756
                                                                        --------             --------
  Net current assets (liabilities) of discontinued operations           $    392             $ (4,550)
                                                                        ========             =========
  Non-current assets:
       Property and equipment, net                                      $  2,690             $  3,374
       Capitalized software development                                    1,808                1,604
       Notes receivable                                                      100                  100
                                                                        --------             --------
  Net long-term assets of discontinued operations                       $  4,598             $  5,078
                                                                        ========             ========

</TABLE>

                                       4
<PAGE>

Expected operating results relating to the discontinued operations from April 1,
2000 until the expected  disposal date will be included in the estimated loss on
disposal  and  will  be  recorded  as a  charge  in the  consolidated  financial
statements in the fourth quarter of fiscal 2000. The Company expects to record a
charge for estimated  loss on disposal of the switch  business of  approximately
$10.0  million in fiscal  2000,  which  includes an  estimated  $3.0  million of
expected  losses of the segment for the first two quarters of fiscal  2001.  The
Company  expects to dispose of the  segment by the end of the second  quarter of
fiscal 2001.

The operating results relating to the above discontinued  segment are as follows
(dollars in thousands):

<TABLE>
<CAPTION>
                                                        3 Months Ended                          9 Months Ended

                                                 ------------------------------          ------------------------------

                                                            (Unaudited)                             (Unaudited)
                                                 Dec. 31, 1999    Dec. 31, 1998          Dec. 31, 1999     Dec. 31, 1998
                                                 -------------    -------------          -------------     -------------
<S>                                                <C>             <C>                    <C>                 <C>
  Net sales                                        $  3,964        $   9,148              $   17,579          $ 30,001
                                                   ========        =========              ==========          ========
  Income (loss) from discontinued
       operations                                  $ (3,113)       $  (1,502)             $  (7,552)          $   (418)
                                                   =========       ==========             ==========          =========

</TABLE>


After the  decision to  discontinue  the switch  business,  the Company  will be
operating in only one segment, long distance services.

1996 - 1997 Restructuring
-------------------------
In November  1996 (and  revised in February  1997),  the Board of  Directors  of
Coyote Network Systems,  Inc. (the "Company") approved a restructuring plan (the
"Restructuring")  to separate its telecom switching equipment business (the "CTL
Business") from the following businesses:

                   Segment                              Company

    Telecommunications equipment distribution            C&L
    Wire installation and service                        Valley
    Wholesale distribution of meat and seafood           Entree/APC

On  February  3,  1997,  the  Company  sold a  majority  of the assets of APC to
Colorado  Boxed Beef  Company.  On  November  20,  1997,  the  Company  sold its
telecommunications  equipment distributor subsidiary,  C&L Communications,  Inc.
("C&L"), to the management of C&L. In March 1998, the Company sold its 80% owned
wire  installation  and  service  subsidiary,  Valley  Communications  Inc.,  to
Technology Services Corporation.

As of June 18, 1999,  the Company had  collected all cash related to the sale of
discontinued  operations  of the meat and seafood  segment  except  $410,000 due
under a note and the Company's only remaining asset of  discontinued  operations
was real  estate  related  to the land and  buildings  of the  discontinued  APC
operation.  Based upon an estimate of the market value of the real  estate,  the
Company took an  additional  charge of $900,000 in the second  quarter of fiscal
1999.  This charge is included in the loss from  discontinued  operations in the
condensed  consolidated  statement  of  operations  for the three  months  ended
September 30, 1998 and the nine months ended  December 31, 1998.  The asset book
value  as of  March  31,  1999  was  $234,000,  net of  mortgages  and  reserves
applicable to the property.  This value is included in the net long-term  assets
of discontinued operations as of March 31, 1999.

                                       5
<PAGE>
Prior to the sale of the land and buildings in July 1999, additional expenses of
$314,000 were incurred  related to property  taxes.  These costs are included in
the loss from discontinued operations in the condensed consolidated statement of
operations for the nine months ($314,000) ended December 31, 1999.

NOTE 3   DISPOSITION OF ASSETS

--------------------------------------------------------------------------------

On October 27, 1999, pursuant to a Purchase Agreement, dated September 30, 1999,
among the Company,  American Gateway  Telecommunications,  Inc. ("AGTI"), Coyote
Gateway, LLC d/b/a American Gateway Telecommunications,  ("AGT"), Prinvest Corp.
("PVC"),  Prinvest  Financial Corp. ("PFC";  together with PVC,  "Prinvest") and
Arnold A. Salinas ("Salinas"), the Company sold its approximately 80% membership
interest  in AGT to AGT's  remaining  member,  AGTI,  which  previously  held an
approximately 20% membership interest in AGT (the "Sale").

In consideration  for the Sale, the Company will receive,  for next 18 months, a
monthly  margin  participation  payment  from AGT equal to $0.0025 per minute of
telecommunications   traffic   switched   or   routed  by  AGT   through   AGT's
telecommunications  network,  which  the  Company  estimates  will be less  than
$50,000 and will record any such revenue upon receipt.  Pursuant to the terms of
the  Agreement,  AGT will remain  directly  liable for its $10.2 million  credit
facility (the "Credit  Facility") with Prinvest,  whose affiliate owns 53.75% of
AGTI.  The  Company  will be  released  from its  obligations  under its  pledge
agreement  with  Prinvest  which  pledge  secured  the Credit  Facility  and, in
connection  therewith,  Prinvest will return to the Company the 708,692 treasury
shares of the  Company's  common  stock which had been pledged by the Company as
collateral under the Credit Facility.  In addition, as a result of the Sale, the
Company  will no longer be  required  to  reflect  the  Credit  Facility  on its
consolidated financial statements and, accordingly, the Company has recognized a
gain of  $6,209,000  from the Sale.  The Company will not receive any  immediate
cash payments as a result of the Sale.

In addition, for the next 18 months, the Company shall be the exclusive supplier
of  telecommunications  switches  to AGT;  AGT  shall  receive  a fifty  percent
discount  on all  Company-manufactured  switches it  purchases  from the Company
during this time period.  As of May 26,  2000,  the Company has not received any
switch   purchase   orders  from  AGT  and  does  not  anticipate   any.  Coyote
Communications  Services,  LLC, an affiliate of the Company which is included in
the discontinued operations, shall continue to provide maintenance and technical
support  services to AGT on a month-to-month  renewable  basis,  pursuant to the
parties' existing maintenance and servicing agreement.

For  the  nine  months  ended  December  31,  1999,  sales,   operating  losses,
depreciation  and capital  expenditures  of  $425,000,  $1,602,000,  $59,000 and
$346,000,  respectively,  of Coyote  Gateway are included in the Company's  long
distance  services  business.  The identifiable  assets as at December 31, 1999,
however, exclude the assets of Coyote Gateway.

NOTE 4   SHAREHOLDERS' EQUITY

--------------------------------------------------------------------------------
Options and Warrants
----------------------------------------------

During the quarter  ended  December  31, 1999,  the Board of  Directors  granted
five-year  options to purchase a total of 308,481 shares of the Company's common
stock to certain  employees.  The per share  exercise  prices of these grants is


                                       6
<PAGE>

equal to the closing  market price of the Company's  common stock on the date of
the grant and range  from  $4.00 to  $4.625.  These  options  vest in  one-third
increments over three years.

During the quarter ended December 31, 1999, in consideration for  administrative
consulting  services,   the  Board  of  Directors  granted  to  certain  outside
consultants  fully vested  options to purchase  212,000  shares of the Company's
common  stock at an exercise  price of $4.00 per share and 55,000  shares of the
Company's common stock at $4.50 per share and a three-month  term. The per share
exercise  prices of these  grants is equal to the  closing  market  price of the
Company's common stock on the date of the grant. A fair market value of $224,000
was recorded as administrative  expense for these options. The fair market value
was determined using the Black Scholes model.


In December 1999, two employees,  David Held and Bruce Thomas,  converted  their
holdings of 500 Class B Units into 275,624 shares of the Company's  common stock
in accordance with the terms of conversion available to the holders.


During the quarter  ended  December 31,  1999,  a total of 524,979  options were
exercised  which resulted in proceeds of $2.3 million.  These  exercises were in
accordance  with the terms of the Coyote  Technologies  Employees  Non-Qualified
Stock Option Plan and Company  common stock was issued for that number of common
shares.



NOTE 5    RELATED PARTY TRANSACTIONS
--------------------------------------------------------------------------------
In October and November  1999,  the Company has completed  and received  funding
under a series  of two  demand  loans.  The  first  loan for a total  amount  of
$600,000 was  provided to the Company by Mr.  Fiedler in the amount of $175,000,
by Mr. Latham in the amount of $75,000 and by Mr. Alan J. Andreini, an affiliate
shareholder of the Company, in the amount of $350,000 in October 1999. This loan
bore  interest at bank's  prime rate (8.25% at  December  31,  1999) plus 1% per
year, was repayable on demand and was secured  against the Company's  investment
in Systeam, S.p.A.

The second loan for a total amount of $1,225,000  was provided to the Company by
Mr. Richard L. Haydon, an affiliate shareholder of the Company, in the amount of
$500,000,  by Mr.  Alan J.  Andreini  in the  amount  of  $225,000  and by three
non-affiliate  shareholders  in a combined  total amount of $500,000 in November
1999.  This loan bore interest at the rate of 17.5% per year and was  repayable,
on demand by the lenders,  no earlier  than March 31, 2000.  The maximum term of
the loan was three years to November 2002.  This loan was secured by a pledge of
shares of the common stock of INET  Interactive  Network System,  Inc., a wholly
owned subsidiary of the Company.  Under the terms of this loan, the lenders were
granted,  pro-rata,  a combined total of 73,500 three-year  warrants to purchase
shares of common  stock of the Company at an exercise  price of $4.50 per share.
The warrants will result in a non-cash  interest  expense charge of $0.3 million
to be recognized over the term of the debt.

These  borrowings  together with accrued  interest were fully repaid in February
and March 2000.

On January 25, 2000,  the Company  entered into a Financial  Services  Agreement
with First Venture  Leasing LLC ("First  Venture"),  pursuant to which a limited
liability  company  (the  "LLC")  was formed by First  Venture to offer  certain
leasing and credit  packages to the  Company's  customers.  First  Venture is an
entity in which Mr. James McCullough,  the Company's Chief Executive Officer and
a  director,  had a 25%  interest,  which  he  relinquished  effective  upon his


                                       7
<PAGE>
becoming an officer and  director of the Company on February 2, 2000.  The terms
of the agreement with First Venture were the result of arms' length  negotiation
in which Mr.  McCullough did not  participate.  The agreement with First Venture
was approved by our Board of Directors.

In connection with the Financial  Services  Agreement,  First Venture was issued
620,000  warrants  to  purchase  common  stock at $5.00 per  share  and  261,600
warrants at $7.35.  The closing price of the Company's  common stock on the date
of grant was  $11.00.  These  warrants  vested upon grant.  These  warrants  are
subject to  shareholder  approval,  therefore,  the Company will  determine  the
charge, if any, to earnings once shareholder approval is obtained.

On January 26, 2000,  the Company also entered into a Remarketing  Agreement and
two separate license  agreements with the LLC formed by First Venture,  pursuant
to which  such LLC shall act as the  Company's  agent in  remarketing  equipment
leased to third parties upon the  termination  of such leases and shall have the
right  to  use  certain  trademarks,   service  marks,  trade  names  and  other
designations in connection with the services to be provided by the LLC.

On January 26, 2000,  the Company also entered into a Consulting  Agreement with
KRJ, LLC ("KRJ").  Pursuant to the Consulting Agreement, KRJ provided assistance
in   identifying   strategic   partners  and  business   opportunities,   making
introductions   to  IP  Telephony   customers,   introducing   new   management,
restructuring  vendor finance  programs,  investor  relations,  and  identifying
credit  facilities.  The Company issued to KRJ 2,000,000 shares of common stock.
Of such shares,  1,250,000 will be held in escrow to be released to KRJ in three
equal annual installments, subject to acceleration if certain common stock price
targets are met and sustained. In addition,  unless there is a change of control
of the Company (as defined in the Consulting  Agreement),  KRJ has agreed not to
sell, pledge,  hypothecate or otherwise transfer any of the 2,000,000 shares for
a period 12 months after the respective dates of delivery of any of such shares.
Mr. McCullough has an approximately one-third interest in KRJ and the balance of
KRJ is owned by affiliates  of First  Venture.  The  Consulting  Agreement  also
provides that over the next three years, KRJ will provide  assistance in further
identification  of additional  business  opportunities  both in the domestic and
international  markets.  Compensation  for  these  additional  services  will be
specifically  negotiated  at a future date.  The  Consulting  Agreement has been
approved by the Company's Board of Directors and the terms of the agreement with
KRJ were the result of arms' length  negotiation in which Mr. McCullough did not
participate. In connection with the issuance of the 2,000,000 shares to KRJ, the
Company  anticipates  recording  a  one-time,  non-cash  charge to  earnings  of
approximately $10 million in the fourth quarter of fiscal 2000.

In January 2000, the Company  restructured its management and business strategy.
On January 14, 2000, the Company  issued  options to Mr.  McCullough to purchase
750,000  shares of common  stock at $5.00 per share.  The  closing  price of the
Company's  common stock on the date of grant was $5.50.  Three hundred  thousand
options  vested upon grant,  with the  remaining  options  vesting in  one-third
increments over three years, beginning January 14, 2001, subject to acceleration
if certain  common stock price  targets are met and  sustained.  The options are
subject to  shareholder  approval,  therefore,  the Company will  determine  the
charge, if any, to earnings once shareholder approval is obtained.

NOTE 6   LOSS PER COMMON SHARE

--------------------------------------------------------------------------------

The basic loss per common  share is  determined  by using the  weighted  average
number of shares of common stock  outstanding  during each period.  Diluted loss
per common share is equal to the basic loss per share for all periods due to the
loss from  continuing  operations as the effect of options and warrants would be
antidilutive .

                                       8
<PAGE>
The beneficial  conversion  feature ($1.05  million)  applicable to the Series A
Convertible  Preferred  Stock has been  accounted  for as a dividend to Series A
Convertible  Preferred  shareholders  and has been recorded from the date of the
Series A sale  through to the earliest  date the  preferred  shareholders  could
convert into common stock (September 1, 1999 to December 31, 1999). In computing
the earnings or net loss per share applicable to common stock shareholders,  all
dividends on preferred  stock have been  deducted  from the earnings or added to
the losses to arrive at the earnings or losses  applicable  to common  shares as
follows:

<TABLE>
<CAPTION>
                                             3 Months Ended                    9 Months Ended

                                   -------------------------------     -------------------------------

                                   Dec. 31, 1999     Dec. 31, 1998     Dec. 31, 1999     Dec. 31, 1998
                                   -------------     -------------     -------------     -------------
<S>                                 <C>               <C>               <C>                <C>
Net loss                            $  (5,042)        $  (4,106)        $  (8,245)         $  (6,534)
Beneficial conversion feature           ---                (788)            ---               (1,050)
Preferred dividend                        (72)              (88)             (226)              (117)
                                    ----------        ----------        ----------         ----------
                                    $  (5,114)        $  (4,982)        $  (8,471)         $  (7,701)
                                    ----------         ---------         ---------          ---------

</TABLE>

NOTE 7            SUBSEQUENT EVENTS

--------------------------------------------------------------------------------

Subsequent to December 31, 1999, the following events have occurred:

1.   In December 1999 and January 2000, JNC Opportunity Fund Ltd., the holder of
     600 shares of 5% Series A Convertible Preferred Stock, converted a total of
     356 shares of Series A Preferred Stock and accrued dividends into shares of
     the Company's  common stock. A total of 626,835 shares of common stock were
     issued.

2.   In January and February  2000,  the Company  raised  $13.9  million (net of
     expenses) from the sale of approximately  3.2 million shares of 6% Series B
     Convertible Preferred Stock.

3.   In  February  2000,  the  Company  sold its  approximately  9%  interest in
     Systeam,  S.p.A.  for  $1.2  million  in  cash.  A  gain  on  the  sale  of
     approximately $0.4 million will be recorded in the fourth quarter of fiscal
     2000.

4.   In May 2000,  the Board of  Directors  approved  a plan that  included  the
     discontinuance of the Company's switch business.  The financial  statements
     have been  restated to present  the  operations  of the switch  business as
     discontinued operations (see Note 2.)




                                       9
<PAGE>
ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
           AND RESULTS OF OPERATIONS
--------------------------------------------------------------------------------

General

---------------

Discontinuance of Switch Segment

In May 2000,  we  decided to  discontinue  and  dispose  of our switch  business
including the manufacture,  development, sale and service of DSS Switches and IP
Gateway equipment.  Prior to the May 2000 decision, this segment was our largest
segment in terms of revenues.

Expected operating results relating to the discontinued operations from April 1,
2000 until the expected  disposal date will be included in the estimated loss on
disposal  and  will  be  recorded  as a  charge  in the  consolidated  financial
statements in the fourth quarter of fiscal 2000. The Company expects to record a
charge for estimated  loss on disposal of the switch  business of  approximately
$10.0  million in fiscal  2000,  which  includes an  estimated  $3.0  million of
expected  losses of the segment for the first two quarters of fiscal  2001.  The
Company  expects to dispose of the  segment by the end of the second  quarter of
fiscal 2001.

Following this decision to discontinue the operations of the  telecommunications
switching  business,  our business is reported for as one  continuing  operating
segment, long distance services.

As a result of the discontinuances,  dispositions, acquisitions and other events
described above, the comparison of year-to-year results may not be meaningful.

Results of Operations
------------------------------------
The results for the third  quarter and nine months  ended  December 31, 1999 and
the comparative  historical results have been restated to reflect the operations
of our DSS Switch business segment  separately as discontinued  operations.  The
following  discussion relates to the continuing  operations of the long distance
services and our corporate administration offices.

The long  distance  services  business was comprised of two  subsidiaries:  AGT,
which was acquired in April 1998 and sold in October 1999;  and INET,  which was
acquired in September 1998.

Three Months Ended December 31, 1999 versus Three Months Ended December 31, 1998
--------------------------------------------------------------------------------
The  continuing  operations  of the  two  international  long  distance  service
subsidiaries  that were acquired  during fiscal 1999 generated  revenues of $2.9
million in the third  quarter of fiscal 2000  compared  to $3.8  million for the
third quarter of fiscal 1999, a decrease of $0.9 million,  or 24%. This decrease
was primarily due to the decrease of $1.9 million,  or 50%, of revenues from AGT
between  the two  periods as a result of its sale in October  1999.  Revenues of
INET between the two periods increased by $0.7 million, or 32%, primarily due to
increased sales from international long distance services provided to Asia.

Cost of sales for the third quarter of fiscal 2000 were $2.6  million,  compared
to $3.5 million for the prior quarter,  a decrease of $0.9 million,  or 26%. The
decrease in cost of sales primarily results from the sale of AGT in October 1999
offset by increases in cost of sales of INET of $0.6 million,  or 30% due to the
increase in the volume of traffic carried.

Gross profit on the continuing  long distance  services was $0.3 million for the
third quarter of fiscal 2000 and of fiscal 1999. The slight improvement in gross
profit as a percentage of revenue was primarily due to more  utilization  of the
fixed costs of the INET switching equipment.

                                       10
<PAGE>
Selling and administrative  expenses of the continuing  operations for the third
quarter of fiscal 2000 were $1.8 million, compared to $2.7 million for the third
quarter of fiscal 1999, a decrease of $0.9  million,  or 33%.  This decrease was
primarily  due to the sale of AGT in October  1999 and  reductions  in corporate
marketing and administrative expenses.  Selling and administrative expenses as a
percentage of revenues for the third  quarter of fiscal 2000 were 63%,  compared
to 71% for the third quarter of fiscal 1999.

The  operating  loss for the  third  quarter  of fiscal  2000 was $1.5  million,
compared to $2.4 million in the third quarter of fiscal 1999, a decrease of $0.9
million,  or 38%.  This decrease was primarily due to decreases in cost of sales
and  selling and  administrative  expenses  described  above that  exceeded  the
decrease in revenues.

Interest expense for the third quarter of fiscal 2000 was $0.4 million, compared
to $0.2 million for the third  quarter of fiscal  1999.  The  increased  expense
resulted primarily from an increase in notes payable.

Loss from  continuing  operations  for the third quarter of fiscal 2000 was $1.9
million,  compared  to $2.6  million  for the third  quarter of fiscal  1999,  a
decrease of $0.7  million,  or 27%. The  decrease  resulted  primarily  from the
reduced level of selling and administrative expenses discussed above.

The loss from discontinued  operations for the third quarter of fiscal year 2000
was $3.1 million,  compared to $1.5 million in the third quarter of fiscal 1999,
an  increase  of $1.6  million  or 107%.  This  increase  was  primarily  due to
decreases in revenues of $5.2 million for the period, resulting from a reduction
in orders received for equipment shipments in the quarter and from lower margins
on equipment  sales.  Margin  decreased from 26% to 3% due mainly to deferral of
profit of $2.3 million  related to switching  equipment  supplied under extended
payment terms  granted to customers who are in process of obtaining  third party
lease  financing.  This profit  will be  recognized  when the  Company  receives
payment from these customers.

Nine Months Ended December 31, 1999 versus Nine Months Ended December 31, 1998
--------------------------------------------------------------------------------
The continuing operations acquired during fiscal 1999 generated revenues of $7.2
million in the first nine months of fiscal 2000 compared to $4.6 million for the
first nine months of fiscal  1999,  an increase of $2.6  million,  or 57%.  This
increase was primarily due to $4.6 million of revenues  generated  through INET,
which was acquired in September  1998,  offset by a decrease in revenues of $2.0
million for AGT. The decrease in revenues of AGT primarily results from its sale
in October 1999.

Cost of sales  for the first  nine  months  of  fiscal  2000 were $6.1  million,
compared to $4.5 million for the prior period,  an increase of $1.6 million,  or
36%. The increase in cost of sales  primarily  results from our  acquisition  of
INET and also reflects the increase in the sales volume,  offset by decreases in
cost of sales of AGT resulting from its sale.

Gross profit on the continuing long distance  services for the first nine months
of fiscal 2000 was $1.1 million,  compared to $0.1 million for the prior period.
The  improvement  in gross profit was  primarily due to the increases in revenue
generated by INET, with improved margins from the more profitable  international
traffic to Asia.

Selling and administrative  expenses of the continuing  operations for the first
nine months of fiscal 2000 were $6.8  million,  compared to $4.8 million for the
first nine months of fiscal  1999,  an increase of $2.0  million,  or 42%.  This

                                       11
<PAGE>
increase was  primarily  related to the  additional  selling and  administrative
expenses  incurred  by INET which was  acquired  in the third  quarter of fiscal
1999,  offset by the reduction in expenses related to AGT, which was sold in the
third quarter of fiscal 2000.

The  operating  loss for the first nine months of fiscal 2000 was $5.7  million,
compared to $4.7 million in the first nine months of fiscal 1999, an increase of
$1.0 million, or 21%. This increase was primarily due to the increase in selling
and  administrative  expenses described above offset by the improvement in gross
profit.

Interest  expense  for the first nine  months of fiscal  2000 was $1.1  million,
compared to $0.3 million for the first nine months of fiscal 1999. The increased
expense  results  from a $4.9  million  increase  in  notes  payable  and a $0.3
increase in borrowings under a line of credit.

Non-operating  income for the first nine months of fiscal 2000 was $6.4 million,
compared to  non-operating  expense of $0.3  million in the first nine months of
fiscal  1999.  Non-operating  income in the  first  nine  months of fiscal  2000
included a $6.2 million  non-cash gain  recorded on the  Company's  sale of AGT.
Non-operating  expense  in the  first  nine  months  of  fiscal  1999  consisted
primarily of losses on the sale of marketable securities.

Loss from  continuing  operations  for the first nine  months of fiscal 2000 was
$0.4 million, compared to $5.2 million for the first nine months of fiscal 1999,
a decrease of $4.8 million or 92%. The decrease resulted primarily from the $6.2
million  non-cash  gain  from the sale of AGT and the  other  reasons  discussed
above.

The loss from  discontinued  operations for the first nine months of fiscal year
2000 was $7.9  million,  compared  to $1.3  million in the first nine  months of
fiscal 1999, a increase of $6.6  million.  This  increase was  primarily  due to
decreases in revenues of $12.4  million for the period and a decrease in margins
from 41% to 21%. This decrease is mainly due to deferrals of profit in the first
nine months of $9.6  million  relating to  switching  equipment  supplied  under
extended  payment terms to customers  who are in the process of obtaining  third
party lease financing.  This profit will be recognized when the Company receives
payment from these customers.


Liquidity and Capital Resources
---------------------------------------

As of December 31, 1999, we had a negative working capital of $4.3 million.

During the first nine  months of fiscal 2000 we used $13.2  million  compared to
using $3.6 million during the first nine months of fiscal 1999.  This decline in
operating  cash flow is due primarily to the increase in the losses  incurred in
the continuing long distance services and in the discontinued switch business as
well as increases in working capital required to support the discontinued switch
business operations.

We used cash for  investing  activities  of $1.9  million  during the first nine
months of fiscal 2000 compared to $4.8 million used in the corresponding  period
of fiscal 1999. Capital  expenditures on equipment  purchases of $1.0 million in
the first nine months of fiscal  2000  represented  an increase of $0.4  million
from the corresponding period of the prior fiscal year. Purchases were primarily
for  additional  switching  equipment  required to support the  expansion of the
international  long  distance  services  business.  Net cash  used in  investing
activities in fiscal 2000 also included cash paid in connection  with  increases
in  investment  in  affiliates  of  $0.4  million.   Investment  expenditure  on
discontinued  operations  of  $0.4  million  comprised  capital  expenditure  on
equipment and software for the first nine months of fiscal 2000 compared to $2.8
million in the prior year.

                                       12
<PAGE>
Financing  activities  during the third  quarter of fiscal  2000  provided  $5.3
million,  including  $2.3  million  from  the  exercises  of stock  options  and
warrants,  $2.4  million  from  increases  in notes  payable and a $0.4  million
increase in  borrowings  under a line of credit.  Net cash provided by financing
activities for the first nine months of fiscal 2000 was $14.4 million,  compared
to $6.8 million for the  corresponding  period of fiscal 1999.  This increase of
$7.6 million results  primarily from the net proceeds of a private  placement in
May 1999 of $10.2  million,  increases of $4.9 in notes payable and $3.4 million
from the exercise of stock options and warrants offset by a $4.0 million cost of
redemption of 100 shares of Series A Preference Shares.

In July 1999,  we  received  an offer for a  commitment  for a  stand-by  credit
facility from certain shareholders that would provide a funding commitment to us
of  $3.5  million.  The  shareholders  offering  this  facility  were  Strategic
Restructuring  Partnership,  Mr. Alan J. Andreini,  Junction  Investors,  Ardent
Research  Partners  and Mr. Fred Stein.  This  facility  would be secured by the
stock of INET, bear 12.5% interest on the outstanding  principal  balance and be
repayable on March 31, 2000. We intend to enter into a definitive agreement only
if these funds are needed to support the operation.

During the third quarter of 1999,  the Company  completed  and received  funding
under a series  of two  demand  loans.  The  first  loan for a total  amount  of
$600,000 was  provided to the Company by Mr.  Fiedler in the amount of $175,000,
by Mr. Latham in the amount of $75,000 and by Mr. Alan J. Andreini, an affiliate
shareholder of the Company, in the amount of $350,000 in October 1999. This loan
bore  interest  at bank's  prime rate plus 1% per year  (9.25% at  December  31,
1999), was repayable on demand and was secured against the Company's  investment
in Systeam, S.p.A.

The second loan for a total amount of $1,225,000  was provided to the Company by
Mr. Richard L. Haydon, an affiliate shareholder of the Company, in the amount of
$500,000,  by Mr.  Alan J.  Andreini  in the  amount  of  $225,000  and by three
non-affiliate  shareholders  in a combined  total amount of $500,000 in November
1999.  This loan bore interest at the rate of 17.5% per year and was  repayable,
on demand by the lenders,  no earlier  than March 31, 2000.  The maximum term of
the loan was three years to November 2002.  This loan was secured by a pledge of
shares of the common stock of INET  Interactive  Network System,  Inc., a wholly
owned subsidiary of the Company.  Under the terms of this loan, the lenders were
granted,  pro-rata,  a combined total of 73,500 three-year  warrants to purchase
shares of common  stock of the Company at an exercise  price of $4.50 per share.
The warrants will result in a non-cash  interest  expense charge of $0.3 million
recognized over the term of the debt.

Of the above  funding,  $475,000 was received by the Company  during the quarter
ended  September  30, 1999 and  $1,350,000  was  received by the Company  during
October and November 1999. These  borrowings  together with the accrued interest
were fully repaid in February and April 2000.

We had capital  lease  obligations  of $2.6 million at December 31, 1999 payable
through 2004.

We have a $2.2 million  revolving line of credit secured  against  certain trade
receivables.  As at December 31, 1999,  $1.4 million had been drawn  against the
line representing the maximum amount available at that time. This line of credit
bears  interest at the bank's  prime rate (8.25% at December  31, 1999) plus 4%.
The line of credit  expires on June 30, 2000. We have a long-term  obligation in
the amount of $1.6  million in  connection  with  principal  and interest due on
subordinated debentures,  which bear interest of 11.25% per year. The debentures
mature in the year 2002 and interest only is due until such time.

                                       13
<PAGE>
In  January  and  February  2000,  we  completed  two  private  placements  with
accredited  investors  and sold  3,157,895  shares of our 6% Series B  Preferred
Stock at $4.75 per share.  The total cash we received was $13.9 million,  net of
fees and expenses associated with the placements.

In February 2000, we completed the sale of our investment in Systeam, S.p.A. and
received a cash payment of $1.2 million.  A gain on the sale of this  investment
of  approximately  $0.4 million will be recorded in the fourth quarter of fiscal
2000.

In March 2000,  four of our customers  completed  third party lease contracts in
respect of $14.2 million of switching  equipment  previously sold under extended
payment  terms.  In April 2000,  we received net payments of $11.5  million.  We
expect to  receive  the  remaining  balance  of $2.7  million  once the  lessees
complete their payment obligations to the lessor.

We  believe  that  we  will be able to  continue  to  fund  our  operations  and
acquisitions  by obtaining  additional  outside  financing;  however,  we cannot
assure you that we will be able to obtain the necessary financing when needed on
acceptable terms or at all.


ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
--------------------------------------------------------------------------------

The Company is not  currently  subject to a  significant  level of direct market
risk related to foreign  currency  exchange  rates,  commodity  prices or equity
prices. The Company has no derivative  instruments and does not expect to derive
a material amount of its revenues from interest  bearing  securities.  Currently
the  Company  has no  significant  foreign  operations.  To the extent  that the
Company  establishes  significant  foreign  operations  in the  future,  it will
attempt to mitigate  risks  associated  with  foreign  currency  exchange  rates
contractually  and  through  the  use of  hedging  activities  and  other  means
considered appropriate.  The Company holds no equity market securities, but does
face equity market risk relative to its own equity securities. This risk is most
likely to be manifested by  influencing  the Company's  ability to raise debt or
equity financing, if needed.

Our primary market risk exposure is interest rate risk related to our borrowings
under our revolving line of credit.

Interest Rate Sensitivity Model

---------------------------------

The table  below  presents  the  principal  (or  notional)  amounts  and related
interest of our borrowings by expected  maturity  dates.  The table presents the
borrowings  that are  sensitive  to changes in interest  rates and the effect on
interest expense of future hypothetical changes in such rates.

                                    Twelve Months Ended December 31
                                    -------------------------------
                                       (U.S. Dollars - Thousands)
                                   1999       2000        2001      2002
                                   ----       ----        ----      ----

    Line of credit borrowings    $1,414      $1,000       $500      $500
    Interest expense (A)            120          85         43        43
    Interest expense (B)            134          95         48        48
    Interest expense (C)            106          75         38        38

     -    The  borrowings  bear  interest at the bank's prime rate plus 1/2% for
          the line of credit.

                                       14
<PAGE>

     -    The  interest  expense  shown  for line (A) is based  upon the  actual
          bank's prime rate at December 31, 1999 of 8.25%.

     -    The interest  expense shown for line (B) is based upon a  hypothetical
          increase of one percentage point in the bank's prime rate to 9.25%.

     -    The interest  expense shown for line (C) is based upon a  hypothetical
          decrease of one percentage point in the bank's prime rate to 7.50%.



Forward Looking Statements
-----------------------------------------

All statements other than historical statements contained in this Report on Form
10-Q constitute  "forward looking  statements" within the meaning of the Private
Securities  Litigation  Reform Act of 1995.  Without  limitation,  these forward
looking statements include statements regarding new products to be introduced by
the Company in the future,  statements about the Company's business strategy and
plans,  statements about the adequacy of the Company's working capital and other
financial  resources,  and  in  general  statements  herein  that  are  not of a
historical  nature. Any Form 10-K, Annual and Quarterly Reports to Shareholders,
Form 10-Q,  Form 8-K or press release of the Company may include forward looking
statements.  In addition,  other  written or oral  statements  which  constitute
forward  looking  statements  have been made or may in the future be made by the
Company, including statements regarding future operating performance, short- and
long-term revenue and earnings estimates, backlog, the status of litigation, the
value of new  contract  signings,  and industry  growth rates and the  Company's
performance relative thereto. These forward-looking  statements rely on a number
of  assumptions  concerning  future  events,  and are  subject  to a  number  of
uncertainties  and other  factors,  many of which are  outside of the  Company's
control,  that  could  cause  actual  results  to  differ  materially  from such
statements.  These include, but are not limited to: risks associated with recent
operating  losses,  no assurance of  profitability,  the need to increase sales,
liquidity  deficiency  and, in general,  the other risk factors set forth in the
Company's Annual Report on Form 10-K/A for the fiscal year ended March 31, 1999.
The Company does not  undertake  any  obligation to update or revise any forward
looking  statements  whether as a result of new  information,  future  events or
otherwise.




                                       15
<PAGE>
                           PART II. OTHER INFORMATION
                      ------------------------------------

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS
--------------------------------------------------------------------------------


c)   Information  regarding  issuances of equity securities not registered under
     the Securities Act of 1933 is  incorporated by reference from Notes 4 and 5
     of the Condensed Consolidated Financial Statements in Item 1 of Part I. The
     sale of such securities was exempt from registration  under Section 4(2) of
     the Securities Act of 1933.



ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------------------------------------------------------

a)   Exhibits:

     3.01 Restated  Certificate of  Incorporation,  as amended September 1, 1992
          (incorporated  herein by  reference  to  Exhibit  4.1 of  Registrant's
          Registration Statement on Form S-8 Reg. No. 333-63017).

     3.02 By-Laws of the Company incorporated herein by reference to Exhibit 3.2
          of the Company's Form 10-K for the year ended March 31, 1997.


     4.01 Certificate  of  Designations,  Preferences  and  Rights  of  Series B
          Preferred  Stock,  filed  January  31,  2000  (incorporated  herein by
          reference  to Exhibit 4.2 of  Registrant's  Form 8-K filed on February
          14, 2000).


     27   Financial Data Schedule

b)   Reports on form 8-K:


     (1)  A Form 8-K  dated  November  18,  1999 was  filed  by the  Company  on
          December 1, 1999;  reporting the  termination of the SEC's  previously
          disclosed staff inquiry, under Item 5, Other Events.

     (2)  A Form 8-K dated October 27, 1999 was filed by the Company on November
          12,  1999,  reporting  the  completion  of the  sale of the  Company's
          approximately  80%  membership  interest in Coyote  Gateway to AGTI on
          October 27, 1999, pursuant to a Purchase Agreement dated September 30,
          1999, under Item 2,  Acquisitions or Dispositions of Assets,  and Item
          7, Financial Statements and Exhibits

     (3)  A Form  8-K/A  dated  October  27,  1999 was filed by the  Company  on
          January 10, 2000,  amending the Form 8-K filed on November 12, 1999 to
          include  pro  forma  financial  information  under  Item 7,  Financial
          Statements and Exhibits.




                                       16
<PAGE>
                                   SIGNATURES
                              -------------------


     Pursuant to the  requirements  of the Securities  Exchange Act of 1934, the
Registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.

                               COYOTE NETWORK SYSTEMS, INC.

DATE: May 26, 2000             By: /s/ James R. McCullough
                                   -----------------------------
                                   James R. McCullough
                                   Chief Executive Officer
                                   (Principal Executive Officer)




DATE: May 26, 2000             By: /s/ Brian A. Robson
                                   -----------------------------

                                   Brian A. Robson
                                   Executive Vice President and
                                   Chief Financial Officer
                                   (Principal Financial and Accounting Officer)




                                       17
<PAGE>