Shares in pest control firm TyraTech took a tumble on Wednesday after it revealed that it has to secure additional funding as a result of unexpected order problems with its US partner.
Terminix, which has been TyraTech's North American partner since October 2010, has now suspended the distribution of the SafeShield product. While TyraTech assures that this was not a product performance-related decision, Terminix has decided to wind down its existing inventory to "re-calibrate its product strategy".
TyraTech's revenues for the year ended December 31st are now expected to be $7m, and while this is significantly higher than the $4.6m the year before, growth has slowed considerably since the first half. During the first six months of 2011, the company generated $5m in revenues, helped by a +100% increase in the delivery of Terminix products. In other words, second half revenues totalled just $2m.
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The problems with Terminix are also expected to have an impact on 2012 revenue and operating results. Nevertheless, the company said that pre-tax losses of $2.8m for 2011 are in line with market forecasts.
TyraTech is now "seeking greater clarity from Terminix as to the likely demand for future orders."
"As a result of the shift in demand which has occurred with Terminix, the Directors have determined that the Company will require additional funding in order to adequately capitalise the business so that it may continue to develop the line of products currently in its pipeline whilst continuing the re-negotiations of the current contract with Terminix," the firm said.
Shares were down 23.53% at 19.5p by 09:26.
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