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Technology Stocks : Vari-L (VARL) -- Ignore unavailable to you. Want to Upgrade?

To: akmike who wrote (2551)	10/23/2000 6:40:38 PM
From: RobertSheldon	Respond to of 2702

Oct. 23, 2000 Mr. G. Peter Pappas Interim Chief Executive Officer Vari-L Company, Inc. Dear Pete: In the interest of full and fair disclosure of information which concerns Vari-L’s shareholders, I have asked the participants in the Vari-L Shareholders’ Committee to submit to me questions they wished answered in response to your recent public statements. As you know from communications with the Committee, we have not been satisfied with the information you have been providing. We have repeatedly asked you to hold a conventional conference call to explain your policies, actions, and results, and to answer legitimate investor questions. If you insist on restricting your communications to controlled statements in a periodic "Letter to Shareholders," we ask that you at least answer our questions in those letters. You and your legal advisors must appreciate that Vari-L’s owners should be kept fully informed as to the status of our company, especially in light of reported deficiencies in the monitoring and control of management. Failing to provide information which is clearly available will in itself discourage faith in the workings of the Board of Directors and senior management. We will therefore appreciate your answers to participants’ following questions. In each case, if you cannot provide the answers, please explain why. 1. Who is responsible for recruiting a permanent executive team? Which board members are involved, and in what capacity? What professional services have been engaged? 2. What are the professional credentials of the consultants and advisors you engaged to assist in rectifying the deficiencies in Nasdaq listing requirements? 3. Based on your reports of Vari-L’s sales growth, it is apparent that increasingly high volumes of the company’s products are being produced satisfactorily by its plant and equipment. Please reconcile this with your reported intent to write down the value of fixed assets, including recently acquired manufacturing equipment, to a level suggesting they are essentially worthless. 4. Has there been any change in the status of existing military or other government contracts, or any decrease in new orders? Has the Department of Defense or any other governmental customer initiated an investigation, claim, or any other action associated with the company’s accounting? 5. Has the company initiated any investigation of the conduct of its officers and directors in relation to the reported accounting irregularities? If so, please report the identity and engagement conditions of any professionals, and the related responsibilities or involvement of each current director and officer. 6. Since discovering the accounting irregularities, what steps has the company taken to detect and prevent misconduct? 7. If Vari-L is able to account fully for its 2000 revenues according to GAAP standards, why is it yet unable to release, or account for, its expenses? 8. Your Oct. 12 release stated that year-over-year revenue growth was "substantial." What were 1999 quarterly revenues? 9. What were the company’s consulting, accounting, and legal costs, including the costs of all interim managers and their associated expenses, for the nine months ending Sept. 30? How does Vari-L plan to treat these costs for accounting purposes? If you haven’t decided, what are the alternative treatments being considered? Sincerely, Timothy P. Vick Representative, Vari-L Shareholders’ Committee (219) 838-5087 Continued from previous post... Shareholders' questions for Pete Pappas 10. How much cash did Vari-L have on hand at the end of the second and third quarters? 11. What were inventory levels at the end of the second and third quarters? 12. Break down 3Q 2000 and nine-month revenues by source (commercial, military, etc.), and provide gross margins company-wide and by product line. What are the trends for 2001? 13. What were Vari-L’s backlogs at the end of each quarter this year? What are the estimates for Dec. 31? 14. Will restated P&Ls for 1999 and first half 2000 show a net profit? An operating profit? How much was earned (lost) before the auditing and legal expenses associated with the investigations of accounting irregularities? 15. What are management’s return on equity goals going forward? How much has been, and will be, spent on capital expenditures this year? 16. How many employees does Vari-L currently have? What has been the turnover since June 1? 17. What was the total number of shares outstanding at the end of the third quarter? What was the fully diluted figure, and how many options and warrants are currently outstanding? Have any options been granted, rescinded, or repriced since March 31, 2000? Please let us know if any of these questions cannot be answered in your next "Letter to Shareholders." ******************* The Vari-L Shareholders’ Committee was formed to monitor the activities of the company on behalf of all shareholders during its transition stage and ensure that owners’ interests are being properly represented and served. The Committee is open to all Vari-L shareholders and will collect and exchange information on the company and help owners make informed decisions regarding their holdings. Timothy Vick, a portfolio manager who controls one of the largest blocs of Vari-L stock, is the Committee’s designated Representative. More information on the Committee may be obtained by calling Mr. Vick at (219) 838-5087.