Polymer company AorTech posted a drop in sales in its half yearly report, primarily as a result of a lawsuit and development costs.
The medical supplies company achieved sales of $822,000 for the six months ended September, of which $724,000 was the sale of polymer to customers, compared to last year's revenue of $2.63m.
Last year's sales were boosted following a renegotiated licence deal with St Jude medical centre.
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However, the deal went sour on October 9th, after AorTech served St Jude a lawsuit claiming breach of contract.
St Jude denied the allegations and subsequently filed papers in the US courts seeking a declaratory judgement saying they were not in breach. They were granted a temporary restraining order in November, preventing AorTech from terminating the contract at issue.
AorTech continued to supply materials to St Jude and the cash position was looking critical by the end of October. The company had to gain support from investors, including existing shareholders, to finance the company and the costs of the impending litigation.
The dispute was resolved on Monday, but neither party has admitted liability.
The costs of the lawsuit contributed to the company's lower revenues in the six month period.
The figure also reflected the total deduction of $1.51m incurred by the costs of polymer manufacture, development expenditure, amortisation of intangible assets and administration.
The company said it started the financial period with cash of $1.91m but losses and currency movements between the sterling and the dollar led to a closing cash balance of $295,000.
AorTech was also affected by a sale that fell through for the acquisition of its polymer business.
"The sale process was unsatisfactory due in the main to the difficult time frame that was imposed as a result of the dwindling cash position," the company said in a statement.
Funding was needed to bridge the timescale anticipated to a sale of the polymer business. AorTech concluded that the issue of loan notes was the only option for providing sufficient funds to the company and to protect the interests of shareholders.
Shares fell 4.40% to 87.00p at 11:40 Thursday.
RD
