Turnover was £1.4m for the period down from £1.9m at the same time last year. IE says the 24% decrease in revenues is due to a 30% decrease in service revenues compared to 2003, brought about by the large projects delivered in 2003 to HBOS and redIT.

The vendor says both licence and maintenance revenues were similar to the same period last year, but the reduction in overall revenues coupled with flat costs resulted in an operating loss of £0.4m.

The company managed to raise £0.6m net in January, but by the end of June 2004 its cash position was just £0.1m.

Commenting on the disappointing results, Clive Richards, chairman, iE, says: "A combination of management changes and corporate activity at some of our principal targeted customers resulted in major Internet projects planned for the first half of the year being deferred to the second half of 2004.

"In addition the expected revenues from our AM customers for the .NET Converter did not materialise as customers preferred to renew support for a further two years."

Richards says the firm has completed proof of concepts for two new customers that will significantly improve prospects for securing large orders in the second half of the year. Additionally, the completion of a loans product resulted in a first order soon after the conclusion of the first half-year.

But the vendor continues to profit from its relationship with the Bank of New York, securing three new customers in the first half of the year.

Furthermore, the vendor says the success of the Royal Bank of Scotland's Mint and the Halifax One cards - both banks used the vendor's online customer acquisition systems - shows that the Web is now a prime acquisition channel for credit cards, which is positive news for iE.

Shares in the firm fell 0.25 pence (4.30%) to 5.50 pence.