EarthPort heads to banks with cap in hand

EarthPort, which provides internet surfers with "online wallets" for payments over the web, has said it will run out of cash in a matter of weeks unless it secures additional financing.

Shares in the company were suspended yesterday as the board entered crisis talks with a number of banks about possible emergency loans.

EarthPort - one of many firms worldwide attempting to galvanise disappointing e-commerce trade by providing a secure online payment system - has said consumer reticence over internet transactions had prompted it to lower revenue expectations.

It would not reveal how much additional funding was being sought, but a spokesman for the company said that, at present, EarthPort's operating capital was set to dry up in a matter of weeks.

In January, analysts had forecast a cash burn of almost £1m a month for the year to July, leaving £9m in cash on the balance sheet. Despite a number of redundancies and other cutbacks this year-end figure has not been met.

EarthPort's business model is based on attracting a critical mass of e-commerce businesses. "The success of the system requires merchants to sign up to the system," said house broker ING Barings earlier this year.

"It is all very well having an online wallet full of money, but if you cannot spend it anywhere the system becomes next to useless."

Expensive campaigns by credit card companies and banks to promote internet transactions have failed to allay consumer fears about internet scams. EarthPort, which counts online retail bank Egg among its customers, admits this has hampered revenue growth.

The company, which was listed on Alternative Investment Market in January, has 85 staff.