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Phorm made a loss of $24.7m (£13.8m) in the first half of 2008 as it fought privacy advocates, lobbied to get politicians on side and tried to overcome technical problems dogging its ISP adware system.

The firm's losses were up 52 per cent compared to the same period in 2007. It still has about £24.9m in cash reserves, mostly from a stock sale earlier this year. Revenue remains zero.

In an unusually lengthy statement accompanying the results, CEO Kent Ertugrul said the response from advertisers - the people Phorm hopes will eventually repay investors' tens of millions - to the "Open Internet Exchange" has been "very positive" in the UK. He didn't reveal any deals with ad agencies or publishers, but said "we have engaged with the majority of the key media agencies".

Phorm's figures were released the day after BT finally scheduled its third trial of the technology. Ertugrul said he expects development of the business "to accelerate now that the BT trial has begun". He said talks with ISPs overseas are continuing, and that a consumer trial with an unnamed non-US provider is ongoing.

Political scrutiny has made behavioural targeting a hot potato for US ISPs, but Phorm has hired a major lobbying firm in a bid to persuade Congressmen to its point of view.

In the UK the BT trial is set to last several weeks* and it is likely to be several months before a full network deployment with advertisers on board.

Ertugrul said: "We appreciate that there are significant challenges to meet in order for the Company to realise the opportunity to tap into the growing internet advertising market. The Company is still early in its stage of development and as is to be expected of any project of this size, there will be many issues to deal with to deploy our system."

The full statement and results are here. ®

*Strangely, El Reg hasn't heard from anyone who has been invited to take part in BT's test. Get in touch if you have.

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