HAUGEN, SPRINGER & CO., P.C.
Certified Public Accountants
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9250 East Costilla Avenue Suite 150 Englewood, CO 80112
(303)799-6969 FAX (303)799-6974 Robert S. Haugen, C.P.A.
www.hsco.com [email protected] Charles K. Springer, C.P.A.
July 5, 2000
The Audit Committee of the Board of Directors
Vari-L Company, Inc.
c/o S. Lee Terry, Jr., Esq.
Gorsuch Kirgis LLP
Tower 1, Suite 1000
1515 Arapahoe Street
Denver, CO 80202
By letter dated May 12, 2000, we advised you that new information had
recently come to our attention which affected our reports on the financial
statements of Vari-L Company, Inc. (the "Company") for the years ended
December 31, 1997 and 1998. Applicable auditing standards required us to
advise the Company to disclose the newly discovered facts and their impact
on the financial statements to persons who are known to be currently
relying or who are likely to rely on the financial statements and our
related reports. At that time, we further informed you that we were
evaluating other issues that may affect our reports on the Company's
financial statements for 1997, 1998 or other years.
Since that time, we have inquired into various issues. These issues
include the recognition of certain of the Company's revenues, the
capitalization of certain of the Company's expenses, and the depreciation
and amortization policies for certain of the Company's assets for the
years ending 1997, 1998 and 1999. Each of these issues may affect
previously reported assets and net income. Additionally, the Company's
former controller has refused to meet with us and statements attributed to
other management personnel that have been brought to our attention raise
additional questions, including whether we can rely upon management's
representations.
On June 16, 2000, prior to the completion of our inquiry, we were
advised by the Company that the investigation into these, and other
related issues, would be completed by another firm engaged by the Audit
Committee. Because the effects of these issues on the Vari-L financial
statements were not fully determined in the course of our inquiry and will
not likely be determined without the prolonged investigation by the firm
that succeeded us, the issuance of any revised financial statements and
auditors' report will necessarily be delayed.
In this circumstance, we are required to inform you that appropriate
disclosure consists of the notification by Vari-L that the financial
statements for the years ended December 31, 1997, 1998 and 1999 and our
related reports ARE NOT to be relied upon. This notification should be
made to persons known to be relying on the Company's financial statements
or who are likely to rely on the financial statements and related
auditors' reports.
For the foregoing reasons, Haugen, Springer & Co., P.C. hereby
formally resigns as auditor for the Company.
Section 10(A) of the Securities Exchange Act of 1934 (the "Exchange
Act") imposes obligations on independent public accountants to respond to
audit discoveries of "an illegal act". The Exchange Act broadly defines
an "illegal act" as "an act or omission that violates any law, or any rule
or regulation having the force of law". Section 10(A)(f). For the
reasons discussed above, we have become aware of information indicating
that an illegal act(s) has or may have occurred. Section 10(A) obligates
us to inform you, as we have done in this letter, and our letter dated May
12, 2000, of illegal acts that may have occurred.
In accordance with the AICPA's SEC Practice Section Executive
Committee requirement, we are sending a copy of this letter to the Chief
Accountant of the SEC.
Very truly yours,
/s/Haugen, Springer & Co., P.C.
HAUGEN, SPRINGER & CO., P.C.
