Phorm Posts $15.6m Loss Before Tax

Plenty of funding, yet no profits … lots of investor excitement for a largely irrelevant product … this story sounds like something out of the tech-bubble days of the early 2000’s.

Behaviourally targeted online advertising firm continues to burn through dwindling cash reserves at $1.8m a month

Phorm, the behaviorally targeted online advertising firm, has posted a loss before tax of $15.6m (£9.8m) in the six months to the end of June – and continues to burn through its dwindling cash reserves at $1.8m a month.

The company, which has weathered heavy criticism and refocused its strategy to mostly operate outside the UK, failed to report any revenue for the six-month period.

Phorm said that in the first six months of the year it was burning cash at a rate of $2.3m a month. Since then it has reduced this to $1.8m by “transferring a number of operational roles from the UK to Brazil”. However the company’s cash balance is dwindling, and it stood at just $5.7m on 30 June.

The company said it has successfully completed a number of test advertising campaigns and is “currently taking orders for our first commercial advertising campaigns”.

Phorm is aiming to make its first money from a deal with Brazilian firm Oi, although more recently the company has also struck a deal with Telefonica in Brazil, which it has invoiced for $1.6m.

“The launch of our commercial advertising campaigns will result in the first payments from Oi against the amounts invoiced,” said the Phorm interim chairman and chief executive, Kent Ertugrul. “Progress in 2010 to date has seen us bring together all of the pieces which we believe are necessary to generate scalable revenue.”

He also said it was “very actively exploring opportunities in markets outside of Brazil”.

“In particular, we are pleased with our progress in Asia and expect to announce a number of developments over the next year as various opportunities come to fruition,” he added.

Phorm raised £2m in funding on 7 July but admitted it needed more money. “The executive management team has been working to secure further funding, whilst at the same time taking steps to reduce our cash burn,” said Ertugrul. “We expect to be in a position to update shareholders in the near future.”

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