Enough's Enough At Last for Debt-Laden Phorm

Behavioural ad targeting and technology specialist Phorm is to cease trading, having been unable to secure the additional equity and/or debt funding it needed to continue operating. In almost a decade, the company has run up debts of more than $300m.

Phorm sparked controversy in 2008 when it conducted secret trials of its Webwise software with telecoms supplier BT. An investigation by the UK Government concluded that the system did not break EU data protection laws so long as users were given an easy choice to opt out - but the company left the UK market and began a vastly expensive and ultimately unsuccessful world tour lasting eight years.

Ventures in Brazil, Romania, Turkey, China and finally Russia and the USA were each in turn billed as Phorm's crunch moment, where it would finally achieve the scale it needed to generate significant revenue and head towards profit. None delivered.

The company's debt has been mountainous for a long time. Last July, a week before former Arbitron exec Timothy Todd Smith took over as Chief Exec from founder Kent Ertugrul, its accounts for 2014 revealed an operating loss of $37.9m (up from $35.1m in 2013), alongside tiny revenues of $351k (2013: $280k). The same documents showed an accumulated deficit of $302,264,942.

Phorm has now held 'extensive discussions' with certain of its shareholders and third parties, and says it has been unable to secure the necessary funding to stay open. According to its Board of Directors, having taken appropriate legal advice, Phorm is in the process of ceasing the group's trading activities, and has taken the necessary steps to 'significantly' reduce headcount and overheads.

Having commenced the shut down, the Board says it is aware that its shareholders and/or creditors may request that the company commences insolvency proceedings, such as administration or liquidation, but does not anticipate that shareholders will receive any proceeds in relation to their ordinary shares from any such proceedings. Phorm's nominated adviser has resigned, resulting in the automatic cancellation of the firm's ordinary shares of nil par value each from trading on the AIM market of the London Stock Exchange in 30 days.

Phorm's web site is not available, as the firm says it is not able to pay its hosting provider.