Argonaut sailing to brink of oblivion

BRITAIN is on the verge of losing the company that brought Harry Potter to life in computer adventures unless a quick solution is found to cash problems at Argonaut Games.

Founder and chief executive Jez San has been locked in talks with the rest of his board and fellow investors about a capital reconstruction since admitting three days ago that cash reserves were so low it may soon be unable to trade.

The shares traded at around 3p - a massive fall from its all-time high of about 105p in summer 2000 - giving it a market value of just £2.8m, before its shares were suspended on Friday.

Joining the infamous 95% Club - the amount certain stocks have fallen since the technology bubble burst - is an accolade San could do without.

Made an OBE in 2002 New Year's Honours List when he was only 35, San was feted as one of the country's leading technology whizkids.

That year saw Argonaut treble sales to £14.2m, producing maiden pre-tax profits of £2.8m as the royalties flowed in for its two Harry Potter games.

San was reckoned to be one of Britain's richest men, worth about £90m based on his 42.6% stake in Argonaut and 17% in Arc, the technology firm he spun Argonaut out of.

But, like all software developers, Argonaut needed a constant flow of deals with publishers.

By February 2003, the shares were just 13p after delays to its Malice game. The company swung into a first-half loss and has been in the red ever since.

Last week, Argonaut blamed 'signing certain major new development contracts, which have resulted in the company not obtaining the cash receipts it had been anticipating'.

Argonaut's name is a playful melding of Jez San and the 1960s film Jason and the Argonauts which told of the successful quest for the Golden Fleece.

Shareholders and staff will be hoping San can pull off a similar happy ending.