UNITED STATES OF AMERICA
Before the
SECURITIES AND EXCHANGE COMMISSION

SECURITIES EXCHANGE ACT OF 1934
Release No. 44859 / September 27, 2001

ACCOUNTING AND AUDITING ENFORCEMENT
Release No. 1457 / September 27, 2001

ADMINISTRATIVE PROCEEDING
File No. 3-10590

I.

The Securities and Exchange Commission ("Commission") deems it appropriate to institute public cease-and-desist proceedings against Joseph H. Kiser ("Kiser" or the "Respondent") pursuant to Section 21C of the Securities Exchange Act of 1934 ("Exchange Act").

In anticipation of the institution of these administrative proceedings, Kiser has submitted an Offer of Settlement ("Offer"), which the Commission has determined to accept. Solely for the purpose of these proceedings and any other proceedings brought by or on behalf of the Commission or in which the Commission is a party, and without admitting or denying the findings herein, except that Respondent admits the jurisdiction of the Commission over him and over the matters set forth herein, Respondent has consented to the entry of the findings and the imposition of the cease-and-desist order ("Order") as set forth below.

II.

On the basis of this Order and the Offer submitted by Respondent, the Commission finds that:

A. Joseph H. Kiser, a resident of Aurora, Colorado, currently serves as chief scientific officer of Vari-L Company, Inc. and has been employed by Vari-L since 1954 in various capacities including president, chief executive officer and vice president of engineering. Kiser served as chairman of the board of directors from approximately 1980 until he stepped down in September 2000.

B. Vari-L Company, Inc. ("Vari-L"), a Colorado company located in Aurora, Colorado, designs, manufactures and markets a wide range of radio frequency and microwave signal source processing components used in commercial and military/aerospace applications such as base stations, cellular phones, satellite communications systems, missile guidance, radar and navigational systems. Vari-L's common stock is registered with the Commission under Section 12(g) of the Exchange Act and was quoted on the National Association of Securities Dealers Automated Quotation System ("NASDAQ") until it was delisted on September 7, 2000. Vari-L's common stock currently trades on the Pink Sheets. The company filed reports on Forms 10-KSB and 10-QSB through its December 31, 1999 Form 10-KSB and currently reports on Forms 10-K and 10-Q.

C. Vari-L filed materially misstated financial statements with the Commission which reflected consistently increasing revenue and earnings from at least 1996 through the first quarter of 2000. Vari-L overstated revenue, earnings, and most assets by (i) improperly recognizing revenue before products were shipped to customers by either treating them as bill and hold sales or simply holding its books open at quarterly and year-end periods; (ii) recognizing false revenue; (iii) improperly capitalizing internal labor and related overhead costs as property, equipment and intangible assets; (iv) overstating inventory by disregarding physical inventory counts, estimating inventory amounts in lieu of a physical count, failing to value inventory based on actual manufacturing costs, and failing to provide adequate inventory reserves; and (v) improperly deferring period costs. These accounting misstatements allowed Vari-L to report pretax income instead of a pretax loss each period from 1996 through the first quarter of 2000.

D. In a September 12, 2000 press release Vari-L announced that it was restating its previously issued financial statements to reflect a required $30-$35 million write down of its reported December 31, 1999 balance sheet. In February 2001, Vari-L filed with the Commission restated financial statements for the annual period ended December 31, 1999, and for quarterly periods ended March 31, 1999, June 30, 1999, September 30, 1999, and March 31, 2000. Vari-L's March 31, 2000 balance sheet was overstated by $39 million or 132% as a result of the company overstating reported pretax income for the quarter and in prior financial statements. Vari-L's accounting misstatements resulted in Vari-L reporting cumulative pretax income of $17.1 million from 1996 through the quarter ended March 31, 2000 instead of a $14.4 million cumulative pretax loss for the same period.

E. Section 13(b)(2)(B) of the Exchange Act states that every issuer must "devise and maintain a system of internal accounting controls sufficient to provide reasonable assurances that - . . . (ii) transactions are recorded as necessary (I) to permit preparation of financial statements in conformity with generally accepted accounting principles [GAAP] or any other criteria applicable to such statements . . . ."

F. Vari-L violated Section 13(b)(2)(B) when it failed to devise and maintain a system of internal accounting controls and filed financial statements with the Commission that failed to conform with GAAP. Kiser, as chairman of Vari-L's board of directors, failed to take adequate steps to implement internal accounting controls sufficient to allow the preparation of Vari-L's financial statements in conformity with GAAP and, therefore, was a cause of Vari-L's violation of Section 13(b)(2)(B).

G. On April 27, 2000, Vari-L filed a definitive proxy statement on Form 14-A, signed by Kiser, containing material misrepresentations and omissions regarding Kiser's compensation. The proxy statement sought, among other things, the re-election of Kiser to Vari-L's board of directors. The proxy statement stated that in 1999 Kiser received a total of $370,000 in salary and bonus and $92,322 in other annual compensation. The proxy statement failed to disclose an additional $58,000 of compensation Kiser received in 1999 including $8,000 for insurance premiums on Kiser's personal antique gun and auto collections, $11,000 for tax preparation and estate planning services, $16,000 for personal use of a company auto, $18,000 of debt forgiveness, and $5,000 for disability and life insurance.

H. Section 14(a) of the Exchange Act requires any person who solicits a proxy or consent or authorization in respect to any security registered pursuant to Section 12 of the Exchange Act, other than an exempted security, to comply with such rules as the Commission may promulgate. Rule 14a-3 provides that no solicitation of a proxy may occur unless each person solicited is concurrently furnished or has previously been furnished with a proxy statement containing the information specified by Schedule 14A. Item 8 of Schedule 14A requires small business companies to disclose compensation of directors and executive officers in accordance with Item 402 of Regulation S-B. Item 402 of Regulation S-B requires disclosure of all compensation including "[p]erquisites and other personal benefits, securities or property, unless the aggregate amount of such compensation is the lesser of either $50,000 or 10% of the total of annual salary and bonus reported for the named executive." In addition, Rule 14a-9 proscribes, among other things, use of a proxy statement "containing any statement which at the time and in light of the circumstances under which it is made, is false or misleading with respect to any material fact, or which omits to state any material fact necessary in order to make the statements therein not false or misleading . . . ."

I. Vari-L violated Section 14(a) of the Exchange Act and Rules 14a-3 and 14a-9 thereunder, by failing fully to disclose information required to be disclosed in Vari-L's proxy statement filed in 2000. The $58,000 of undisclosed compensation should have been disclosed because it constituted perquisites and other personal benefits that exceeded 10 percent of Kiser's reported annual salary and bonus. Kiser signed the proxy statement without taking adequate steps to ensure that it fully disclosed all compensation he received in 1999. Kiser, therefore, was a cause of Vari-L's violation of Section 14(a) of the Exchange Act and Rules 14a-3 and 14a-9 thereunder.

III.

In view of the foregoing, the Commission deems it appropriate to accept the Offer submitted by Respondent. Accordingly, it is

ORDERED that pursuant to Section 21C of the Exchange Act that Respondent cease and desist from causing any violation and any future violation of Sections 13(b)(2)(B) and 14(a) of the Exchange Act and Rules 14a-3 and 14a-9 thereunder; and

FURTHER ORDERED that Respondent shall, within 30 days of the entry of this Order, pay disgorgement of $58,000 and prejudgment interest thereon of $4,969 to the United States Treasury to be held in an account pending the filing of the Commission's plan of distribution. Such payment shall be: (1) made by United States postal money order, certified check, bank cashier's check or bank money order; (2) made payable to the Securities and Exchange Commission; (3) hand-delivered or mailed to the Office of the Comptroller, U.S. Securities and Exchange Commission, Operations Center, 6432 General Green Way, Stop 0-3, Alexandria, VA 22312; and (4) submitted under cover letter which identifies Kiser as the Respondent in these proceedings, the file number of these proceedings, a copy of which cover letter and money order or check shall be sent to Donald M. Hoerl, Associate Regional Director, Securities and Exchange Commission, Denver Regional Office, 1801 California Street, Suite 4800, Denver, Colorado 80202.

By the Commission.

______________________________
Jonathan G. Katz
Secretary

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