Shares in Earthport have been suspended from trading at the company's own request, pending the completion of talks with 'potential providers of new equity finance'. Elliott Davis reports.

News that the secure payment systems specialist is seeking additional cash is somewhat surprising, bearing in mind Earthport (EPO) tapped investors for £25 million last spring. This remains the largest fundraising to be completed by an Ofex-listed group. A spokesman for the company, which carried out a cost cutting restructuring programme in April, admitted that cash burn had been high in the past – largely as a result of 'development costs'.

These costs reflect Earthport's investment in the long awaited third version of its on-line payment platform. Although the technology clearly has a great deal of potential – the platform is being touted as a possible replacement for the banking industry's existing 'legacy' system of transferring funds – developmental delays have already led to warnings of 'a material shortfall in revenues for the year'.

As a result of these sentiments, house broker ING Barings is forecasting that impending figures for the 12 months to June will reveal a £13.5 million pre-tax loss. However, the company was today buoyed by a declaration from technical auditor Scientific Generics that the new system is 'fit for purpose', i.e. it does what it is supposed to do.

With Version 3 now set for launch and chief executive Jonathan Baile hinting that negotiations with 'a large number of implementation partners' are underway, ING expects 2002 to be significantly better. A £200,000 pre-tax profit is predicted.

The shares were suspended from trading at 28.5p, just 1p above the all-time low, valuing Earthport at £30.2 million.