Altris Software Inc, the San Diego, California, document management software company, has filed a set of revised financial statements revealing that a devastating $10.7m chunk has been cut from its revenues in a restatement exercise stretching back to early 1996. The problems stem from the perennial minefield area of revenues recognition from contracts with value added resellers. For the year ended December 1996, Altris has reversed out $5m of revenues from an original total of $24.5m, turning a $2.3m profit into a $2.5m loss. And for the nine months to September 1997, a further $5.8m of revenues have been chopped out of the $19.5m total, increasing losses to $5.4m from the previously announced $1.4m loss. Altris is the latest to join the software hall of shame, populated by a host of companies who have been caught recording software sales well in advance of any legitimate date at which income could be booked. Last month its CEO Jay Tanna walked glum faced from the company to be replaced by Roger Erickson, whose first move was to cut salaries by 25% across the board in a kind of company wide grounding exercise. Erickson says he wants to focus the technical talents of the company’s employees under more disciplined management. He also said he had taken measures to strengthen the company’s internal accounting controls. But the latest 10K filing with the SEC shows a net cash outflow for the year to December 1997 of $2.3m from operating activities and Altris had to issue large quantities of subordinated debt and preference stock just to stay afloat. Cash reserves at the year-end fell to just $2.1m and Altris has a mountain of litigation suits piling up against it, all of which will cost a fortune to defend. It’s impossible to imagine anyone buying debt in Altris in the short term, and so the company is left clinging to cash inflows from its existing user base, which it readily admits might not be enough. Revenues for the last quarter of 1997 grew by 15% to $4.0m but net losses widened to $3.0m from $2.6m last year. Added to which, last week the company announced that its newest product, the Altris EB document management program, did not perform in a manner that the company considered acceptable for production use. The preview release is now scheduled for July, so no revenues expected here yet. The new management team has made some swinging cost cuts in the intervening months, but we will have to wait until June to see what effect this has had on cash flows. The time taken by the accounts department to set the last two years figures straight has also delayed the publishing of Altris’ first quarter 1998 results. These will now be out sometime in the next two weeks.
