Accounting irregularities have just emerged at Peritus Software Services Inc, pushing the company’s already battered stock price below the critical $1 level which demarcates the Nasdaq’s potential de-listing zone. Peritus, a software maintenance company based in Billerica, Massachusetts, said on Monday that it would be restating its results for the last two quarters, reducing revenues for the six months by $1.4m to $20.5m and increasing reported net losses by $1.6m to $5.2m. Peritus said the changes result from an, incorrect interpretation of the complex provisions regarding recognition of revenue for combined software/services arrangements under Statement of Position 97-2. The accounting standard in question, SOP 97-2, was issued exactly one year ago and has proved difficult to decipher in many real life applications where software companies are pushing the rules on revenue recognition to the limit. In this instance, the restatement centers around a single invoiced customer with whom Peritus claims to have reached an agreement for $1.9m of fees. However, management changes at this customer have left Peritus unable to substantiate certain elements of the deal, it said. The restatement is doubly bad for Peritus as it follows the news in September that the company was laying off a third of the work force in a second cost reduction initiative, following on from the first round of employee lay offs in March. Peritus has blamed falling revenues on delays in client buying decisions and decreases in Year 2000 licenses due to market shifts. The company is currently forecasting substantial losses for its third quarter through September, with final results to be announced before the end of October.
