In the great numbers game of modern American commerce, a senior financial regulator remarked last year, 'integrity may be losing out to illusion'. Now more than 12 months since the warning from Arthur Levitt, chairman of the Securities and Exchange Commission (SEC), illusion is finally ceding ground to reality - the first sign perhaps of an enforced 'integrity'. The ranks of Internet start-ups that fuelled unprecedented growth and flouted both conventional stock-market accounting and wider economic principles are facing demands for a fresh look. They may form the 'New Economy' but there is something timeworn about cooking the books. Week by week, tales are starting to emerge of stacked 'revenue' figures being hastily - and painfully - revised; of firms spending millions on marketing to snare a fraction of the cost in sales; of paper fortunes shrinking overnight as a shake-out takes hold. Insiders are warning of a coming period of 'Cold Turkey', pain that undoubtedly lies ahead for an Asia ever deeper in the delirium of dotcom fever. Just consider SciQuest .com, an on-line clearing house for laboratory supplies and a hot listing last November. At times, the firm's market value has reached US$2.2 billion on the basis of potential rather than current earnings. Last month, it announced its revenue had risen to US$2.63 million during the last quarter, a lift of 1,400 per cent, the sort of figure on which dotcom investors thrive, and use to justify insane valuations. But imagine how more rational investors felt when it emerged after the initial release that SciQuest's net cut amounted to US$35,198 in revenue. There was nothing illegal or unusual about the ploy. SciQuest is a middleman, a commission agent which routes supplies through buyers and sellers and as a result does not keep stock. Its initial statement referred to gross revenue. The costs of that revenue - what it paid its suppliers and shippers - was US$2.6 million. The technique is repeated among far bigger players. The giant Priceline.com, a firm which has in part the virtual auction of travel bookings, listed revenue for the last year of a mammoth US$482.4 million. Its financial statement referred to 'Costs of Revenue', a figure which included 'product costs' of US$423 million. Such figures are posted safe in the knowledge that high share prices depend on the appearance of revenue and new markets - the rest can be sorted out later. The problem is, the rest is being sorted out now. In just one day last week, 35-year-old Michael Saylor, saw US$6 billion of his US$10 billion paper fortune disappear. His software firm Microstrategy accepted auditors' advice and revised the way it calculated sales and profits. Mr Saylor, who just two weeks ago was busy outlining a vision to spend US$100 million on a giant free education Web site to bring together the '10,000 greatest minds of our times', revised a profit of US$12.6 million to a loss of between US$34 million and US$40 million. MicroStrategy shares then fell from US$226 to US$87. Such stark revisions come as an SEC-inspired taskforce under the Financial Accounting Standards Board starts to examine reporting rules. Initial indications suggest a tough task ahead, given the pioneering nature of e-commerce. It comes, too, as share prices of several leading electronic goods retailers take a hit as they struggle to turn new market penetration into cold profit. 'We are definitely starting to see the signs of the shake-down in all sorts of ways,' said Rob Leathern, an analyst with New York e-commerce analysis firm, Jupiter Communications. 'We might start to see new valuation standards, mergers and acquisitions among some of the smaller e-commerce firms and a new way of looking at fresh ideas . . . people will be looking at the new market with new strategies, perhaps they will be more discerning,' said Mr Leathern. 'But it should be remembered that some of these businesses are creating solid new business-to-business enterprises, so it could be a very healthy thing.'