Terayon Communication Systems (fka TERN)

[SEBASS]

Delayed 10Q3 Explained

On Sept, 26 2005 Needham brokearge has stated that final bids have been formally submited and TERN under independant newly appointed auditor is evaluating what company is worth and during that time under evaluation of finances auditor has discovered that customer was recorded during wrong peroid for past period. Jerry Chase (CEO)came onboard of TERN in 2004 and might have not been aware of past fillings and he had no knowledge of it. When this happened in order for sale to occur CFO has to fix this error befoer he signs current 10Q3. Also if sale is pending and bids have been submitted that would have to be disclosed in 10Q as required by SEC of 8K disclosure forms. So CEO has decided to wait and plead with SEC to delay filling on basis of sale of TERN and fixing previous period so sale can occur. 10Q was delayed because TERN is still evaluation offers and current value of the company under independent auditor. TERN did not want to disclose yet the sale of the company because TERN has not decided on final bid of many bidders while if 10Q would be filled TERN would have to disclose that info which would complicate choosing the final bid and current valuation of TERN assets.

This month sale should complete for few reasons.
First is that sale has been prepared for last few months. Second brokerage like Needham believes that sale will occur by year end.
Third buyer would want to take advantage of tax write offs accumilated by TERN towards the balance sheet. This perticular benefit i do not understand so someone would have to elaborate on it.