Terayon announced on November 7, 2005 its delay in filing the Form 10-Q as the company is reviewing the recognition of revenue for certain transactions during prior periods. Terayon initiated the review after determining that certain revenues recognized in the second half of fiscal year 2004 from a customer may have been recorded in incorrect periods. The revenue matters under examination relate to the timing of revenue recognition and may result in a restatement of prior period financials. Terayon cannot determine at this time when the investigation will be completed, but the company intends to file its Form 10-Q for the third quarter of 2005 as soon as practicable following the conclusion of the investigation. The SEC has informed Terayon that it has initiated an informal inquiry into the matters discussed in the November 7, 2005 press release. Terayon intends to cooperate fully with the SEC’s inquiry.
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