The poor summer added to the woes of loss-making high-tech company Oxonica, which is struggling for survival.

Oxonica's sun lotion additive Optisol saw sales fall to £41,000 from £264,000 because of poor weather in the UK.

Chief executive Kevin Matthews said: "It rained a lot last year as well, so people like Boots were carrying quite heavy stock and weren't in a position to re-order.

"That has been a bit of a disappointment, but the market interest is still there and we are working to reduce costs to make it more attractive."

The Oxford University spin-out, based at Begbroke Science Park, has a cash pile of just £3.2m, which it hopes will last until 2010.

It is commercialising nanotechnology research which makes sun lotion more stable, so that it doesn't break down in strong light.

Overall operating losses grew to £3.1m during the first half of 2008, up from £2.9m the previous year.

Revenue was slashed by by 51 per cent to £1.5m, mainly due to the loss of a contract with Turkish company Petrol Ofisi, which had been buying Oxonica's fuel-saving additive, Envirox, but ended the deal after disappointing test results.

Oxonica's problems were compounded earlier this month when rival company Neuftec, set up by a former employee, won a £500,000 High Court case over a patent dispute.

However, the company said a strong pipeline of potential customers had been established following a successful follow-on trial with Stagecoach buses. Russian mining companies are also testing Envirox.

Last week, Oxonica signed a potentially life-saving £3.5m deal with US company BD (Becton Dickinson) involving a loss-making US subsidiary, Oxonica Diagnostics.

Some 20 staff work in the US, and Mr Matthews said there were no plans to trim the 20-strong workforce at Begbroke.

Half the money is payable now, in exchange for the patents covering Oxonica's medical diagnostics technology, Nanoplex, which involves 'biomarkers' — metal particles which show the progress of disease in the blood or tissue. As well as diagnosing infections, heart disease and cancer, it could be used in lab tests for food pathogens and animal health.

The other £1.75m is payable if Oxonica completes technical transfer milestones. Oxonica will also earn royalties on sales of BD products covered by the patents.

It will continue to offer the technology to the security industry — for tracking valuable or dangerous goods — and to evaluate new opportunities in diagnostics, agriculture and fine chemicals.

Oxonica is chaired by Australian business angel and former star of BBC TV show Dragons Den Richard Farleigh, who said: "The board continues to believe that Oxonica has considerable potential and is optimistic that the group can move closer to break-even by the end of the year."