LONDON -- Orchestream Holdings plc (NASDAQ:OCHS)(LSE:OCH) today announces the following:Revenue recognition: Last week, it came to the attention of the Board that a sale recorded in Q4 2001 had been inappropriately recognised as revenue. Since this time, the Board has been conducting a detailed analysis of all outstanding receivables, assisted by its auditors, Ernst & Young. This analysis has now established that sales amounting to 2.7 million pounds sterling in 2001 and 0.9 million pounds sterling in Q1 2002 were inappropriately recognised as revenue.As a consequence, the company's interim financial statements for the six months ended 30 June 2002 will incorporate a prior year adjustment of 2.7 million pounds sterling. The adjustment will result in a decrease in revenues and outstanding receivables and an increase in cumulative losses brought forward.Following this restatement, revenues for 2001 were 12.1 million pounds sterling (previously reported as 14.8 million pounds sterling) and losses were 37.8 million pounds sterling (previously reported as 35.0 million pounds sterling). Unaudited revenues for Q1 2002 were 2.5 million pounds sterling (previously reported as 3.4 million pounds sterling) and losses were 5.7 million pounds sterling (previously reported as 4.8 million pounds sterling).Q2 trading update: Revenues for the second quarter are expected to be in the region of 1.6 million pounds sterling. Within these revenues, Service Activator sales amounted to approximately 1.3 million pounds sterling.The company had cash at bank as at 30 June 2002 of 10.0 million pounds sterling. Cash collection in the quarter amounted to 2.4 million pounds sterling. As a result of concerns about the financial viability of certain customers, an additional bad debt provision of 0.6 million pounds sterling will be recorded in the second quarter. Trade debtors at the end of Q2, net of adjustments and additional provisions, stand at 4.8 million pounds sterling.Operational review: Following the appointments of Greg Lock as Executive Chairman and Anthony Finbow as Chief Executive on 29 May 2002, the executive management team of Orchestream has conducted a thorough review of the business and the operations of the company.As a consequence, the company is today announcing a further series of cost reduction measures, designed to cut quarterly operating costs to 3.1 million pounds sterling by the end of August compared to the current run rate of 4.25 pounds sterling per quarter. These savings will principally come from a further reduction in headcount of approximately 60, bringing Group headcount to around 100.The one off costs associated with these measures are expected to amount to 0.8 million pounds sterling in Q3 and are expected to result in savings of 1.1 million pounds sterling per quarter.NASDAQ de-listing: As part of the operational review we took the decision to de-list our American Depository Shares from NASDAQ as the resources required to maintain our listing were not in proportion to the trading volumes.On 8 July 2002, the company received a NASDAQ Staff Determination to the effect that its ordinary shares evidenced by its American Depository Receipts are subject to de-listing from the NASDAQ at the opening of trading on 16 July 2002 as it has failed to comply with Marketplace Rule 4310 (C) (14). Owing to the extensive reorganisation of the company and management changes since the beginning of the year, Orchestream has not yet filed its annual report for the year ended 31 December 2001 on Form 20-F with the SEC. The company plans to file as soon as possible.Orchestream Holdings PLC