Chairman Max Shepherd floated the sale possibility after a special general meeting yesterday, but said in an interview that directors and bankers were meeting to discuss the next step.
Botry Zen sought $1.8 million through capital notes and options with a $1 face value, to stay within its Bank of New Zealand credit facilities.
It had commitments for $1.3 million in capital, but the move required shareholder approval.
Dr Shepherd said directors were scheduled to meet BNZ staff yesterday and markets would be notified when there was an outcome.
He could not say why shareholders voted down one of the four remits required to approve the extra capital, saying directors now had to deal with the outcome.
The capital was needed after an assessment of the company's operating requirements but took on extra urgency when it was revealed there were production difficulties.
The possible presence of an unwanted chemical in grain or a fault in the sterilisation process had prompted unpredictable yield outcomes from the ferment-ation process.
This affected pre-season production of both its Botry-zen and Armour-zen biological control agents for the grape-wasting botrytis cinerea fungus.
"The anticipated effect of these production difficulties is such that the company will require more than the $1.3 million of capital, which would have been immediately available through the proposed capital raising had it been approved by shareholders, if the company was to stay within its existing credit facilities with the BNZ."
Botry Zen also held its annual meeting yesterday and Dr Shepherd said there was still shareholder support for the product and belief in the intellectual property it holds.
"There was disappointment and distress that production problems have come on at this very late hour."
Botry Zen was a specialist company using specialist equipment to produce specific products.
According to its last balance sheet, it had assets of $2.4 million and current liabilities, including a bank overdraft and accounts payable, of $1.3 million.
But it retained a deficit of $8.46 million, which related to accumulated losses.
It made a full-year loss to March 31 this year of $1.2 million.
Botry-zen was specifically developed for the effective control of botrytis cinerea fungal infection in grapes.
The company Botry Zen has an exclusive licence to technology to produce, distribute and sell Botry-zen and its related Armour-zen, which provide protection against the fungus.
The technology was developed by a co-operative of researchers from HortResearch, a joint venture between Winegrowers of New Zealand and New Zealand Grape Growers Ltd, and Zenith Technology.
Botry Zen was floated as a publicly-listed company in August 2001 at an issue price of 10c, but since then has gone back to the market to raise almost $10 million.
The shares last traded at 0.014c. .
