To: Ken Wilson 4 August 1998
From: Lawrence Burg Fax#: (817) 284-7528
Subject: Accounting delays
Ken,
Beverly was good enough to suggest that I fax you some thoughts.
I am a shareholder, only since about March, when TE_N was brought to my attention by a friend. I've managed to hold through the volatility. Since last week I've been accumulating based on Pat's word of financials to be delivered yesterday, the basic fundamental strengths of TE_N, and the technical weakness exhibited in the market.
I'm obviously concerned about the near term fluctuations. Not so much from an investment standpoint, but as a matter of deteriorating public perception. The market is certainly registering a vote lately as to it's faith in TE_N. I'm sure if you exposed yourself you'd be able to get an earful. I'm still confident the tide can turn. I only hope not too many will be soured in the interim.
I spoke to Al Dahl today, to get a feel for the problem w/the financials. It seems that the delay is in getting concurrence on his audit of the `96 & `97 numbers. With only himself, it seems he's farmed them out to a colleague in keeping with SEC rules under AICPA standards. He mentioned that he hopes to have them in your hands by week's end.
The larger nut is see in the next 2 months is the numbers for the first half of 1998. Mr. Dahl indicated that he wouldn't be able to attend to them until at least the 15th of August; completion somewhere into September. I don't think it would be wise to replace Mr. Dahl's at this point since he has experience with your fiscal history which should expedite processing the 1998 numbers, to date. I'm sure he has also established some channels and relationships for steering TE_N into reporting status.
Mr. Dahl mentioned that part of the delay in completing the `96 & `97 audits was a weakness in accounting at TE_N. He also mentioned that as TE_N grows, someone should be retained to manage the books and smooth bookkeeping and reporting. This is where I see the opportunity.
Have you considered hiring an accountant or CFO? He or she could begin work immediately under Mr. Dahl's guidance, becoming familiar with TE_N's history and speeding the completion of audited `98 numbers. Keep them on the TE_N payroll. Maintain the compensation for Mr. Dahl, but ease his workload.
I'm not sure how pivotal market perception is to your plans. As you move into a positive cash flow position, the equity markets may not hold too much sway for financing future expansion or ventures. It would be unwise to alienate the market too severely. From a shareholders/market perspective, this is what you are doing.
Thanks for you time. I would love to hear back from you when you get the chance.
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