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Phorm was forced into deep cost-cutting after its controversial battle to monitor and profile web users burned through an average of more than $4m per month last year, its financial results today reveal.

The behavioural targeting outfit, whose operations are headquartered in London but which is registered in Delaware, reported an operating loss of of $49.8m without bringing in a penny in advertising sales. The previous year it lost $32.8m.

Investment income of $1.8m, minus financing costs, left it with a net loss of $48m, compared to a $32.2m net loss the previous year.

At the end of December Phorm had $23.2m cash remaining. At 2008's burn rate that would have given the firm about six months to live, but at the tail end of last year it shut down its US operations, ousted four New York-based board members and laid off staff.

Reduced losses brought by cuts meant that by May 31 this year, it had $12.8m remaining, which Phorm topped up earlier this month up by selling off 20 per cent of its equity for $24.3m.

The fundraising leaves the firm with about $37m in reserve. Today it predicted it will spend about $1.8m per month this year and described its financial position as "adequate".

In his statement to investors, chairman and CEO Kent Ertugrul said Phorm's problems in the UK had prompted its push into Korea. It is currently running a trial with Korea Telecom.

He said: "It is taking longer to deploy in the UK than originally anticipated. As a result, in parallel, we have focused on the development of multiple international markets."

Phorm claimed to have "engagement with ISPs in 15 markets, including eight of the top 10 globally". In the UK, following a public trial last September. BT has not openly committed to a rollout schedule for Phorm technology, which will be branded "WebWise".

UK authorities' failure to act over two earlier, secret trials of Phorm's systems, uncovered by The Register, is now the subject of legal action by the European Commission. It wants to compel the government to tighten privacy regulations, in line with EU law.

On Tuesday the Commission in London said it had received a response from the government to its formal letter in April and was considering its next move. The government told privacy campaigners it would not make public the content of the response. ®

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